Preamble

The House met at a Quarter before Three of the Clock, Mr. SPEAKER in the Chair.

PRIVATE BUSINESS.

Provisional Order Bills [Lords] (No Standing Orders applicable),

Mr. Speaker laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That in the case of the following Bills, brought from the Lords and referred on the First Reading thereof, no Standing Orders are applicable, namely:

Ministry of Health Provisional Order Confirmation (Bethesda) Bill[Lords]

Ministry of Health Provisional Order Confirmation (Bradford) Bill [Lords].

Bills to be read a Second time tomorrow

Senior Public Elementary Schools (Liverpool) Bill (Standing Orders applicable thereto not complied with),

Mr. Speaker laid upon the Table Report from one of the Examiners of Petitions for Private Bills, That in the case of the following Bill, referred pursuant to the Order of the House of the 3rd day of July, the Standing Orders, which are applicable thereto, have not been complied with, namely:

Senior Public Elementary Schools (Liverpool) Bill.

Report referred to the Select Committee on Standing Orders.

Stroud District Water Board, etc., Bill [Lords,]

Read the Third time, and passed, with Amendments.

Oral Answers to Questions — ANGLO-FRENCH-RUSSIAN CONVERSATIONS.

Mr. Day: asked the Prime Minister whether, in view of the negotiations proceeding between His Majesty's Government and the Governments of France and Russia, he can state whether the Franco-Soviet Treaty of Mutual Assistance of 2nd May, 1935, the Franco-Rumanian Treaty of Friendship of 10th June, 1926, and the Franco-Yugoslav Treaty of Friendly Understanding of 11th November, 1927, are still in existence without alterations?

The Under-Secretary of State for Foreign Affairs (Mr. Butler): So far as His Majesty's Government are aware, the answer in each case is in the affirmative.

Mr. Day: Can the right hon. Gentleman say whether any inquiries have been made or whether any suggestions have been made as to alterations?

Mr. Butler: No, Sir.

Mr. Vyvyan Adams: asked the Prime Minister whether he has any statement to make on the Anglo-Russian negotiations for a common front against aggression?

Mr. Noel-Baker: asked the Prime Minister whether he will make a statement concerning the negotiations with the Government of the Union of Soviet Socialist Republics for a treaty of mutual assistance against aggression?

Mr. Neil Maclean: asked the Prime Minister whether he can make any definite statement of the progress of the British Soviet discussions; and, if not, whether there is any possibility of a time-limit being set to these protracted negotiations?

The Prime Minister (Mr. Chamberlain): I have at present nothing to add to the statement I made on this subject two days ago.

Mr. Noel-Baker: In view of the fact that these negotiations have now being going on for three and a-half months, and in view of the fact that in the early weeks at least the Russian Government showed very great willingness to come to some


agreement, will His Majesty's Government perhaps consider the early publication of all the proposals put forward on both sides, in order that this House and public opinion may judge where the responsibility lies?

The Prime Minister: Probably before we have done there will be publication of the proposals that have been put forward, but I do not think that at the present time it would be desirable to do anything which might lead to further recriminations.

Mr. Maclean: Is it not the case that the public in this country are very much concerned as to who is to blame for these protracted negotiations, and will the right hon. Gentleman give a chronology of the negotiations that have taken place so that any blame can be attached to the proper quarter?

The Prime Minister: I do not think that while negotiations are in progress it would be a good thing to enter into arguments as to who is to blame.

Mr. Noel-Baker: rose —

Sir William Davison: On a point of Order. Would you ask the hon. Member's attention to be drawn to the fact that there are other Members in the House besides himself who have a number of questions on the Paper, and that he takes an undue amount of the time of the House?

Mr. Noel-Baker: May I, with great respect, in view of the importance of the matter, ask the Prime Minister whether he will consider publication, not with a view to stimulating recriminations, but in order that public opinion might assist towards a solution of this problem, upon which the peace of the world probably depends?

The Prime Minister: No, Sir.

Oral Answers to Questions — FAR EAST (SITUATION).

Mr. Day: asked the Prime Minister whether he has had a report of the arrest on Sunday, 2nd July, of Mr. E. T. Griffiths, second mate of the British steamer "Yochow," in the Japanese concession at Tientsin; and whether he can state the reason given by the Japanese authorities for this arrest?

Mr. Butler: Mr. Griffiths was arrested in the ex-German Concession at Tientsin on 2nd July on a charge of insulting a Japanese sentry. Representations were made by His Majesty's Consul-General, and Mr. Griffiths was released on the morning of 7th July.

Mr. Day: Can the right hon. Gentleman say whether Mr. Griffiths has been asked to hold himself in readiness for further examination?

Mr. Mander: If the British Government cannot protect British subjects in the Far East, had they not better make way for some Conservative Government that can protect them?

Mr. Noel-Baker: asked the Prime Minister whether His Majesty's Government have yet received any reply from the Japanese Government to their demands for the release of the British military attach è, Colonel Spear?

Mr. Butler: No, Sir, but His Majesty's Ambassador is continuing his efforts to obtain Colonel Spear's release.

Mr. Arthur Henderson: Is it not quite contrary to the accepted views in regard to diplomatic immunity that this British military attaché should even be held under arrest by the Japanese?

Mr. Butler: That might be taken to be the case.

Mr. Wedgwood Benn: Is it true that Colonel Spear is to be submitted to court-martial?

Mr. Butler: We have seen a statement made by a Japanese spokesman, and His Majesty's Ambassador has been instructed immediately to find out whether this statement represents the official view of the Japanese Government.

Mr. Shinwell: Why cannot the British Government arrest one of the Japanese representatives in this country?

Sir Archibald Sinclair: Are we to understand that the British Government propose to enter into diplomatic negotiations, with a Government while the military attaché of His Majesty is being threatened with court-martial? Is not that in very striking contrast with the behaviour of His Majesty's Government when certain engineers in Moscow were arrested?

Mr. Butler: We must first find out whether the statements are, in fact, as reported.

Mr. Kirkwood: In the event of your finding out what the statements are —

Mr. Speaker: rose —

Oral Answers to Questions — GERMANY (ESPIONAGE CHARGES).

Mr. Arthur Henderson: asked the Prime Minister whether his attention has been drawn to the official charges of espionage made by the German Government against His Majesty's Government in general, and the former British Consul-General in Vienna in particular; and whether he has any statement to make in relation to such charges?

Mr. Butler: My Noble Friend has seen in the German Press certain charges of a general character which he strongly repudiates. I have nothing to add to my reply to my hon. Friend the Member for East Lewisham (Sir A. Pownall) on 26th June about the former British Consul-General in Vienna.

Mr. Henderson: Is it not rather extraordinary that the German Government should make these statements in their official Press without making any official representations to His Majesty's Government?

Mr. Butler: It is very much to be regretted.

Sir A. Sinclair: Are His Majesty's Government asking the German Government to formulate the charges?

Mr. Butler: I am not aware whether the right hon. Gentleman is referring to the general charges or to this particular instance?

Sir A. Sinclair: To this particular officer who has been held up to opprobrium.

Mr. Butler: I referred to this particular officer in my original answer, and I stated that there is no reflection on the Consul-General, whose character and work are held in the highest esteem.

Sir A. Sinclair: But the German Government have made a reflection. Are the British Government asking the German Government to formulate their charges?

Oral Answers to Questions — DANZIG.

Mr. Mander: asked the Prime Minister whether he will make it clear that the bringing into Danzig by Germans, contrary to Statute, of artillery capable of threatening Gdynia would be regarded by Great Britain, France and Poland as an act of aggression, and would be resisted?

The Prime Minister: I have nothing to add to the full statement which I made on 10th July setting forth the attitude of His Majesty's Government towards the Danzig question.

Mr. Mander: Is the Prime Minister able to say whether he is satisfied that artillery of this nature has not so far reached Danzig?

The Prime Minister: Perhaps the hon. Gentleman will put that question down.

Oral Answers to Questions — AERIAL WARFARE (CIVIL POPULATION).

Mr. A. Henderson: asked the Prime Minister whether he can now make a statement on the survey recently carried out by Departments of His Majesty's Government into the question of the aerial bombing of civilian populations in time of war; and whether his attention has been drawn to the proposals recently made by ex-President Hoover for preventing such bombings?

Mr. Butler: In reply to the first part of the question, I have nothing to add to the answer given by my right hon. Friend the Chancellor of the Duchy of Lancaster to the hon. Member for West Leyton (Mr. Sorensen) on 14th June. The answer to the second part is in the affirmative.

Mr. Henderson: Is it not a fact that this survey was first announced in February last year, nearly 16 months ago, and is it not time that the Government were in a position to give some information to the House on this matter? How are they getting on with this survey?

Mr. Butler: My right hon. Friend the Chancellor of the Duchy of Lancaster gave several reasons why there has been some delay in making this survey. I would refer the hon. and learned Member to the statement of principle made by His Majesty's Government on this subject at the last meeting of the League Assembly, in September.

Mr. Henderson: In view of the explanation now put forward, do not the Government consider it desirable immediately to get into contact with other Governments, with a view, if possible, to securing general agreement as to the necessity of preventing the bombardment of the civilian population?

Mr. Butler: The view as to such desirability is, I am sure, shared by every Member of this House, but it is necessary to await the conclusion of this survey before making any further statement.

Mr. Henderson: When is the survey likely to be concluded?

Mr. Butler: I hope, as soon as circumstances permit.

Oral Answers to Questions — BRITISH SUDAN (INTERNED ITALIAN SOLDIERS).

Mr. Ammon: asked the Prime Minister the number of Italian soldiers who have been, or are, interned in the British Sudan owing to their having crossed the border from Abyssinia as a result of the fighting during the past six months?

Mr. Butler: My Noble Friend has asked His Majesty's Ambassador in Cairo to furnish him with a report on this matter.

Oral Answers to Questions — LORD PERTH (EMOLUMENTS).

Mr. Bellenger: asked the Prime Minister why the emoluments to be drawn by Lord Perth in his present office exceed the salary of his old office as His Majesty's Ambassador?

Mr. Butler: Lord Perth's total emoluments in his present office are appreciably less than those which he received in Rome.

Mr. Bellenger: Will the right hon. Gentleman say what was the salary enjoyed by Lord Perth, as I asked in the question?

Mr. Butler: The salary of Lord Perth in Rome was £ 2,500. In addition, he received frais de représentation which amounted to a considerable sum.

Mr. Bellenger: Will the right hon. Gentleman say whether, in basing Lord Perth's salary, not only his ordinary salary of £ 2,500 a year was taken into account, but these additional emoluments

to which the right hon. Gentleman has just referred?

Mr. Butler: All those considerations were borne in mind when Lord Perth's present emoluments were considered and decided.

Captain Alan Graham: Is not the work achieved more important than the salary?

Oral Answers to Questions — EX-GERMAN CONSUL, LIVERPOOL.

Mr. Kirby: asked the Prime Minister whether Herr Walther Reinhardt, formerly German Consul-General in Liverpool, has yet left this country?

Mr. Butler: Yes, Sir.

Oral Answers to Questions — RAW MATERIALS (DISTRIBUTION).

Mr. N. Maclean: asked the Prime Minister whether any discussions are taking place between representatives of Britain and France and representatives of the Axis Powers with a view to reaching an agreement on the distribution of raw materials?

Mr. Butler: No, Sir.

Oral Answers to Questions — ANGLO-JAPANESE TREATY.

Mr. N. Maclean: asked the Prime Minister whether the terms of the Anglo-Japanese Treaty, now in operation, have been published; and when they were submitted to Parliament for ratification?

Mr. Butler: I presume that the hon. Member refers to the Anglo-Japanese Treaty of Commerce and Navigation signed in London on 3rd April, 1911. The treaty was presented to Parliament in April, 1911, and published in June, 1911.

Mr. Maclean: May I point out, on a point of Order, that the Minister is under a misunderstanding? I am not referring to the Treaty of 1911, but to the Treaty that was concluded after the Washington Conference in 1921. Can the right hon. Gentleman give me any particulars regarding that, as that is the Treaty that is now in operation?

Mr. Butler: The presumption upon which I based by answer was with regard


to the Treaty of 1911. If the hon. Member will put down another question, I will give him an answer about the Treaty of 1921.

Mr. Maclean: Are we to understand that the whole diplomatic policy of this Government is based on the Treaty of 1911

Oral Answers to Questions — ROYAL AIR FORCE.

CONTRACT, GLASGOW.

Mr. J. J. Davidson: asked the Secretary of State for Air what firm submitted the lowest tender for No. 1 contract at the Rolls-Royce works, Hilling-ton, Glasgow; whether the lowest tender was accepted; and whether steps will be taken by the Air Ministry to maintain the cost tendered?

The Secretary of State for Air (Sir Kingsley Wood): The lowest tender was submitted by Messrs. Sir Lindsay Parkinson and Company, Limited, and has been accepted. In regard to the last part of the question, the firm are bound under the contract to complete the work for the sum tendered.

Mr. Davidson: Is the right hon. Gentleman aware that the firm already, under a previous contract, undercut all other firms and after a month had the contract torn up? Will he see that this is avoided with regard to this contract?

Sir K. Wood: If the hon. Gentleman puts a question down with regard to the form of contract I will gladly answer it.

Mr. Davidson: There is one down.

EDALE (STEEL WORKS PROPOSAL).

Mr. Marshall: asked the Secretary of State for Air whether the proposal by a Sheffield firm to build a steelworks at Edale has now been abandoned; and whether he can assure the House that the Government have no intention of reserving the site for a Government factory?

Sir K. Wood: The proposal has been abandoned by the firm in question, and my Department has no intention of reserving the site for Air Ministry purposes.

MARRIAGE ALLOWANCES.

Mr. T. Smith: asked the Secretary of State for Air whether, as is the case

with the Militia, marriage allowances are paid to men in the Royal Air Force who are 20 years of age or over?

Sir K. Wood: Yes, Sir.

Mr. Smith: Has this information been conveyed to the Royal Air Force?

Sir K. Wood: I believe so.

Mr. Smith: Thank you.

BIRTH CERTIFICATES.

Mr. Silkin: asked the Secretary of State for Air whether he is aware that it is the practice for persons desiring to join the Air Force who have not a birth certificate available to be charged 3s. 7d. a copy if they obtain it at Somerset House, or 5s. Id. if it is obtained from the local registrar of births, deaths, and marriages; and whether, in view of the hardship involved in the case of persons 'who are unemployed or of limited means, he will take steps to enable persons volunteering for the Air Force to obtain a copy of their birth certificate without charge?

Sir K. Wood: Verification of the date of birth of any man desiring to enlist in the Royal Air Force, Royal Air Force Volunteer Reserve or Auxiliary Air Force can be obtained without charge by the recruiting officer from the General Register Office. The second part of the question does not, therefore, arise.

Mr. Silkin: Is the right hon. Gentleman aware that I have in my hand a letter in which the sum of 5s. 7d.has been demanded for a certificate for this purpose? Will he look into the matter and see that it is not repeated?

Sir K. Wood: Yes, Sir. Perhaps the hon. Member will let me have the letter and I will make immediate inquiries.

SEALAND STATION (FOOD SUPPLY).

Mr. F. Anderson: asked the Secretary of State for Air whether he will give a fortnight's normal menus for the food supplied to men of the Royal Air Force at Sealand aerodrome; and whether any complaint has been received with regard to the supply of food and its service at this Air Force station?

Sir K. Wood: I regret that copies of the menus are not available in my Depart-


ment, but I have given instructions for them to be obtained and I will send them to the hon. Member when they are received. No complaints have been received in regard to the food or its service at this station.

Mr. Anderson: Is any machinery in existence for dealing with the complaints made by the men? Are inspections made without the knowledge of the officers concerned in this matter, and, if so, will the right hon. Gentleman make further inquiries, in particular with regard to the Sealand Camp?

Sir K. Wood: Machinery exists for the ventilation of complaints by airmen, through the airmen's representative on the messing committee, which meets each week, or through the orderly officer when he visits the dining-room.

ELECTRICITY SUPPLY (CHARGES).

Mr. De la Bère: asked the Minister of Transport whether he will introduce legislation to make it obligatory on the electricity supply companies to charge no higher rate per unit for electricity supplied through slot-meters than is charged through the ordinary supply meters?

The Minister of Transport (Captain Wallace): I am informed that any difference in the rate per unit is usually attributable, not to a higher charge being made for the electricity supplied through pre-payment meters, but to the inclusion of an amount for meter rental, which in the case of quarterly meters is charged separately, and for any other charges which may be due for such services as assisted wiring.

Mr. De la Bère: Is my right hon. and gallant Friend aware that three years have passed since the McGowan report, that there are 9,000,000 users of electricity in this country mostly dissatisfied, and that promise after promise has been made; and will he say why the Government do not fulfil their pledge to end the electricity muddle once and for all?

Captain Wallace: If my hon. Friend will refer to the answer I gave not very long ago he will find the exact position.

Mr. De la Bère: Does my right hon. and gallant Friend realise that that position is most unsatisfactory?

Captain Wallace: I think my hon. Friend has said that before.

Mr. McGovern: Is it not an anomaly that people who pay cash are treated more harshly than those who take credit?

Oral Answers to Questions — TRANSPORT.

ROAD SCHEMES, GLAMORGANSHIRE.

Sir William Jenkins: asked the Minister of Transport what number of schemes dealing with narrow roads, dangerous corners and new bridges is sanctioned for the county of Glamorgan for the current year; what number for the next two years, and the estimated cost; and what is the estimated cost of new schemes to be carried out during the next two years?

Captain Wallace: Twelve schemes estimated to cost £42,163 have been approved for commencement this year on the trunk roads in the county of Glamorgan. A further five schemes estimated to cost £322,930 are in course of preparation. Twenty-four schemes on county roads estimated to cost £288,000 are at present in progress. Sixteen schemes, estimated to cost £151,000, have been formally approved but not yet commenced, and 18, estimated to cost £272,000, have been approved, in principle, for commencement before 1st April, 1940. As I have only just received the county council's proposals for the fifth year of the five-year programme, I am not at present in a position to give the total number and cost of schemes submitted by the county council that may be sanctioned this year or in the next two years.

NEATH BY-PASS.

Sir W. Jenkins: asked the Minister of Transport whether he has completed his negotiations with the various interests in the matter of the Neath River Bridge; and when he is likely to sanction the scheme in order to find local employment when the armament rush will be reduced?

Captain Wallace: I hope to complete the negotiations and to make an Order under Section 1 (3) of the Trunk Roads Act for the Neath By-pass at an early date. This will enable me to put the work in hand when circumstances permit.

SEVERN SCHEME.

Sir W. Jenkins: asked the Minister of Transport whether there are any steps


taken to proceed with the Severn Bridge scheme in preparing plans, estimates, etc., as a matter of necessity between England and Wales for transport purposes and an opening between South of England and South Wales; and whether he will take the responsibility for carrying out the scheme?

Captain Wallace: My predecessor informed the Gloucestershire County Council in February of this year that he was prepared to make a grant of 75 per cent, towards the cost of a further investigation which is now proceeding as to the best means of crossing the River Severn below Gloucester by bridge or by tunnel. The responsibility for carrying out a scheme rests with the local authorities. In view of the need for concentrating the financial resources of the country upon its most urgent requirements, and particularly upon defensive armaments, I am not in a position at present to offer a contribution towards the cost of constructing a crossing.

Mr. A. Jenkins: Is not that reply contrary to that which was given by the Minister's predecessor? I understood that, provided that the local authorities could agree upon a scheme, the Government were prepared to pay 75 per cent.

Captain Wallace: If the hon. Gentleman will read my answer and the reply of my predecessor he will see that they are perfectly consistent.

Mr. James Griffiths: Does that answer indicate that the Government are not now prepared to give financial assistance towards a scheme for a Severn bridge, even if the scheme is agreed upon by the local authorities?

Captain Wallace: Not at the present time, and bearing in mind the present financial position. A very clear answer was given by my right hon. Friend a few months ago.

Mr. David Grenfell: Does not the right hon. and gallant Gentleman agree that the provision of a tunnel or a bridge—particularly a tunnel—would in itself be an important contribution to National Defence and food supply?

Captain Wallace: Yes, Sir, but where are we to get the money?

FACILITIES, GLASGOW—INNELLAN.

Mr. Robert Gibson: asked the Minister of Transport whether he is aware that there is serious complaint of lack of travelling facilities between Glasgow and Innellan during the summer months, particularly by persons residing in Innellan whose occupations are in Glasgow and neighbourhood; and whether he will make the appropriate representations, to secure better transport facilities?

Captain Wallace: I am not aware of any such complaint. If the hon. and learned Member will give me evidence of any lack of facilities I will look into the matter.

Mr. Gibson: Is the right hon. and gallant Gentleman not aware that there is no train from Glasgow with a connection to Gourock between 6 and 7 o'clock, and that that is very inconvenient to business people; and will he look into the matter?

Captain Wallace: I have said that I will look into the matter.

LLANELLY AND BURRY PORT.

Mr. J. Griffiths: asked the Minister of Transport the reasons why the authorities for the ports of Llanelly and Burry Port have not been invited to submit proposals to his Department in connection with port facilities in the event of an emergency; and whether he will give consideration to these two ports and invite the authorities concerned to co-operate in this essential work?

Captain Wallace: There is no intention at present of requiring the authorities concerned to incur expenditure in connection with additional facilities at these two ports, and I do not therefore propose to put them to the trouble of submitting schemes. The hon. Member may rest assured, however, that, in the event of an emergency, both authorities will be invited to co-operate in making such use of these ports as circumstances require.

Mr. Griffiths: Is the right hon. and gallant Gentleman aware that these local authorities think that they may be excluded because they are the only ports in South Wales which are not owned by the Great Western Railway Company; and, in view of that feeling, will the Minister invite representatives of the authorities to submit proposals?

Captain Wallace: I should like to make it clear that the hon. Member is labouring under a misapprehension. There is no idea of discriminating against these ports. The real fact is that the facilities at both the ports for handling merchant shipping are inadequate, as the maximum draught they can accommodate is only 20 feet. If the ports can be used we shall be delighted to do so, but it does not seem sensible to the Government that, in view of the limited facilities to which I have referred, we should ask the authorities to submit schemes for additional facilities.

Mr. Griffiths: Is the right hon. and gallant Gentleman prepared to receive representations on the matter?

Captain Wallace: I am always delighted to receive representations from the hon. Member.

Mr. Jenkins: Is it not a fact that the Minister has been asked to receive a deputation? Is he aware that proposals relating to these and other ports in South Wales have been submitted to the Minister and that he has been asked to receive a deputation to deal with the matter?

Captain Wallace: I was not aware of that, but any time that hon. Members opposite wish to see me I shall be delighted to see them.

Mr. Jenkins: Did I not make the application to the Minister himself, in person?

Captain Wallace: Very likely.

TRAFFIC SIGNS, GREENOCK.

Mr. R. Gibson: asked the Minister of Transport whether he is aware that there are frequent misunderstandings and difficulties on the part of drivers of vehicles at the traffic island at the West Station, in Greenock, caused by the insufficiency of directional indicators there; and what steps he proposes to take in this matter towards securing the safety of the public and the assistance of drivers of vehicles?

Captain Wallace: I was not aware of any difficulties experienced by drivers at the traffic island in question, which is provided with three illuminated bollards with "Keep Left" signs for the guidance of traffic. I will, however, make inquiries to see whether any improvement can be made.

Oral Answers to Questions — ROYAL NAVY.

HIS MAJESTY'S SUBMARINE "THETIS."

Lieut.-Commander Fletcher: asked the Parliamentary Secretary to the Admiralty whether he has any statement to make concerning the progress of the salvage of His Majesty's Submarine "Thetis"?

The Parliamentary Secretary to the Admiralty (Mr. Shakespeare): The damage which was sustained last week during a gale by the steamship "Zelo," which is being used as a lifting craft, has now been made good, the ship has returned to the wreck, and the salvage operations have recommenced.

Lieut.-Commander Fletcher: Can the hon. Gentleman say whether any charges are falling upon public funds at the present moment in connection with these salvage operations; or are they being borne by Messrs. Cammell Laird?

Mr. Shakespeare: I would rather that the hon. and gallant Gentleman put a question down regarding that point.

Mr. Leonard: asked the Parliamentary Secretary to the Admiralty whether he is aware that about the year 1916 it was decided upon expert advice to place bulkheads immediately abaft the torpedo tubes in submarines; whether such bulkheads were placed in the "Thetis"; and, if not, when such a policy was discontinued, and why?

Mr. Shakespeare: The answer to the first part of the question is in the affirmative. In all submarines since that date, including "Thetis," such a bulkhead has been fitted.

Mr. Leonard: Is the bulkhead referred to in the hon. Gentleman's answer a bulkhead of a general type, for general protection? Is it not the case that the bulkheads introduced in 1916 were of a type specially designed to deal with accidents to torpedo tubes?

Mr. Shakespeare: Every bulkhead is in the form of a safety device.

Rear-Admiral Beamish: asked the Parliamentary Secretary to the Admiralty whether he will provide facilities for a display and description of the models of submerged torpedo-tube arrangements and also of Davis escape apparatus for the


benefit of Members of this House, either at once or after the report of the "Thetis" inquiry?

Mr. Shakespeare: My noble Friend is trying to arrange a visit to Fort Blockhouse for a party of Members of Parliament, which he hopes will serve the purpose my hon. and gallant Friend has in mind.

CRUISERS.

Lieut.-Commander Fletcher: asked the Parliamentary Secretary to the Admiralty whether it is proposed to approach the United States of America and the French Governments with a view to gaining freedom to lay down eight-inch gun cruisers before 1942, in view of the fact that German cruisers now being completed are greatly superior to any cruisers we possess or are building?

Mr. Shakespeare: The German Government was entitled under the Anglo-German Agreement of 1935 to build up to a maximum of five eight-inch gun cruisers. I have no information that this maximum is being exceeded. There are, therefore, at present no grounds for approaching the Powers to whom we are bound by treaty, with a view to our being released from our treaty obligations.

Lieut.-Commander Fletcher: Is it not the case that the five cruisers which are being completed by the German Government are superior to any cruisers that we have afloat or any that we have building at the present moment; and what steps is the Naval General Staff taking to meet that situation?

Mr. Shakespeare: That, of course, must be a matter of opinion, but the circumstances as regards the number of German cruisers have not altered as compared with the time when the Anglo-German Naval Agreement was made.

Lieut.-Commander Fletcher: Will the hon. Gentleman examine the details as to the range and guns of these ships, their underwater protection and their armour? In view of the facts, is it a matter of opinion that these ships are superior to our ships? Is it not clearly the case that they are superior?

Mr. Shakespeare: The hon. and gallant Gentleman misunderstood my point. I said it was a matter of opinion, and clearly I could not give an answer now; but there

has been no change in the circumstances by which Germany could have one-third of the total tonnage of cruisers.

Mr. A. V. Alexander: Would it not be wise not only in view of the point raised by my hon. and gallant Friend, but in view of the fairly substantial information that is now coming through about Japanese building, to obtain the necessary notification from the other parties to enable us to increase our cruiser strength?

Mr. Shakespeare: All that I said was that there was no ground at present for breaking the naval holiday in respect of these cruisers, which, on the whole, is of great benefit to the naval Powers that are observing it. We should have to have very strong grounds for seeking to use the escalator clause in order to break this cruiser holiday.

Sir A. Sinclair: The hon. Gentleman says that there is no change in circumstances, but surely there is a change of circumstances in the denunciation of the Anglo-German Naval Treaty by the German Government? The hon. Gentleman also says that the power of these cruisers as compared with our own is a matter of opinion, but surely it is a matter on which there is only one opinion?

Mr. Shakespeare: The right hon. Baronet will recall that the German Government have said that they intend to adhere to the policy of the Treaty, which means that the naval holiday in respect of these cruisers will continue.

FLEET VISITS.

Lieut.-Commander Fletcher: asked the Parliamentary Secretary to the Admiralty the last date when a ceremonial visit was paid by the Navy to Dutch ports; and if it is proposed to arrange such a visit in the near future?

Mr. Shakespeare: Ships of the China Station visit ports in the Netherlands East Indies from time to time each year, and will, subject to circumstances, continue to pay such visits.

Lieut.-Commander Fletcher: Will the hon. Gentleman be good enough to reply to my question as to when ships of our Navy last paid a visit to Dutch ports?

Mr. Shakespeare: I am sorry that the question was misunderstood. There was an unofficial visit by His Majesty's Ship "Hastings" to Holland last year.

Lieut.-Commander Fletcher: Will the hon. Gentleman consider an official visit in the near future?

RECRUITS, NEWFOUNDLAND.

Mr. Day: asked the Parliamentary Secretary to the Admiralty particulars of what arrangements have now been made for the purpose of recruiting desirable recruits from Newfoundland for His Majesty's Navy; and the number of applications that have been received and accepted for the 12 months ended the last convenient date?

Mr. Shakespeare: From time to time the Commander-in-Chief on the station arranges for one of His Majesty's ships to call at Newfoundland so that facilities for entry may be given to the men who have applied for entry into the Royal Navy. The question of extending these facilities is under consideration. During the 12 months ended 30th June, some 85 applications have been received. Exact information of the numbers entered is not immediately available, but the number is about 25. I will inform the hon. Member of the exact figure as soon as this information is obtained.

Mr. Day: The hon. Gentleman says that these calls take place from time to time. Can he say how often?

Mr. Shakespeare: I should think about three or four times a year.

SUBVERSIVE LITERATURE.

Mr. Montague: asked the Parliamentary Secretary to the Admiralty whether the published notices on His Majesty's Ship "Resolution" and other naval ships warning men against Communist propaganda and instructing them to surrender leaflets and other material if received have had any recent result; and whether similar notices and instructions are or will be issued respecting Fascist propaganda?

Mr. Shakespeare: Subversive literature is occasionally found in His Majesty's ships and establishments, but it is not possible to say whether its discovery is a direct result of the published notices. With regard to the second part of the hon. Member's question, steps will be taken to deal with subversive literature emanating from any other source should the need arise.

Mr. Leach: Can the hon. Gentleman say what is subversive propaganda? Is the Bible included?

Mr. Shakespeare: It is very difficult to define, but very easy to know when you see it.

Mr. Montague: Does the hon. Gentleman's reply mean that propaganda of the Communist party is necessarily and always subversive? What is the meaning of "subversive"?

Mr. Shakespeare: I never said anything of the kind.

Mr. Alexander: Does the hon. Gentleman really mean, by subversive propaganda, any propaganda that the Government do not like?

TIME-EXPIRED MEN.

Mr. Leslie: asked the Parliamentary Secretary to the Admiralty the number of men who left the Navy last year on the expiration of 12 years' service; and the number who subsequently were placed on the reserve list?

Mr. Shakespeare: The number of men who left the Navy on the expiration of 12 years' service, during the 12 months ending 31st March, 1939, was 1,948, of which 1,752 were naval ratings and 196 marines. None of these men had any liability to serve in the Reserves, and, as ratings other than those who have served a 12-years' engagement join the Royal Fleet Reserve, it is not possible to give the information asked for in the second part of the hon. Member's question without a disproportionate amount of work.

Mr. Leslie: Is the hon. Gentleman aware that quite a number of these men leave after the expiry of 12 years because they see no chance of promotion? Is class bias rampant in the Navy?

Mr. Shakespeare: Whatever they may have done in the past, I could not accept that position now. Promotion in the Royal Navy is quicker than it has ever been.

Mr. Alexander: Will the hon. Gentleman take the opportunity to-day of saying how valuable the reserve service of these men is, and will he endeavour to see that their conditions when they are


called up, as they have been recently, are improved? They are very bad.

Mr. Shakespeare: Certainly I am always pleased to look into the conditions.

Oral Answers to Questions — PALESTINE.

ASSAULTS ON JEWS.

Colonel Wedgwood: asked the Secretary of State for the Colonies whether the nine cases of alleged unprovoked assaults on inoffensive Jews by Britishers in civilian clothes all took place in Jerusalem; and whether the rank and file of the British Army in Palestine wear civilian clothes?

The Secretary of State for the Colonies (Mr. Malcolm MacDonald): The answer to the first part of the question is in the affirmative. As regards the second part, I understand that it is the privilege of all ranks of the British Army to wear plain clothes when off duty, although in Palestine there is little opportunity for this.

Colonel Wedgwood: In that case has the right hon. Gentleman still any doubt that these outrages were the work of the police and not of the Army; and would not the best cure for this, perhaps, be that these inoffensive Jews should be a little less inoffensive?

Mr. MacDonald: I cannot add to the answer I gave to the right hon. and gallant Gentleman's previous question.

ILLEGAL IMMIGRANTS.

Colonel Wedgwood: asked the Secretary of State for the Colonies whether, in view of the fact that the allocation for ordinary legal immigrants into Palestine in five months, namely, 3,645, is at the rate of 8,748 a year, or 10,000 a year less 1,252 deducted for illegal immigrants, he will state why only 1,252 was deducted seeing that some 15,000 have been landed illegally in the last six months, namely, by the official Zionist organisation 4,500, by the Re visionist organisation 7,000, and by in dependent chartered ships 3,500?

Mr. M. MacDonald: As was foreshadowed in the recent White Paper, the deduction of illegal immigrants from the current immigration quota was based on

the ascertained number who had succeeded in entering Palestine between 1st April last, and the date on which the quota was issued. The figure was calculated on this basis. I would add that the information at my disposal points to considerably lower figures of illegal immigrants during the last six months than those given in the question.

Colonel Wedgwood: Can the right hon. Gentleman say what the lower figures are?

Mr. MacDonald: Not with any accuracy, because a considerable number of the illegal immigrants have got in without being detected by the authorities; but all our information goes to show that the figure is considerably lower than the very high figure given by the right hon. and gallant Gentleman.

Mr. Stephen: Will the Minister assure us that he will not take the same steps against the Jews as the right hon. and gallant Gentleman wants to take against the Irish?

MANDATES COMMISSION (REPORT).

Captain Cazalet: asked the Secretary of State for the Colonies whether the Mandates Commission of the League of Nations have now agreed upon their Report on the Palestine Mandate and the White Paper; and whether he has taken any steps to bring to their attention the advantage it would be to the British people if arrangements could be made for the publication of the Report before the end of July?

Mr. Mander: asked the Secretary of State for the Colonies whether he has now received copies of the Report and evidence given before the Mandates Commission of the League of Nations on the subject of the Government's White Paper proposal with regard to Palestine?

Mr. T. Williams: asked the Secretary of State for the Colonies whether he has any statement to make on the consideration of the White Paper on Palestine by the Permanent Mandates Commission; and when the Commission's Report will be available?

Mr. Noel-Baker: asked the Secretary of State for the Colonies whether His Majesty's Government have yet


received the corrected minutes of the discussion of the Permanent Mandates Commission on the subject of Palestine and the recent White Paper?

Mr. M. MacDonald: A copy of the draft of the Commission's observations on the White Paper reached me some days ago; copies of the draft minutes of the private discussions of the members of the Commission reached me this morning; and I am still awaiting a copy of the corrected minutes of the discussions which the members held with me. The Commission have asked His Majesty's Government's comments on the two first documents, which will be sent as soon as possible, when the Commission will no doubt complete their report. I am unable to give any estimate of when the report is likely to be published; this is a matter for the Commission themselves, but I have no doubt that they will publish it as soon as is practicable after its completion.

Captain Cazalet: In view of the report that there has been a considerable difference of opinion among members of the Mandates Commission does not my right hon. Friend think that it would be in the common interests of all that the report should be published as soon as possible so that we may know what these differences were?

Mr. T. Williams: In view of the fact that five members of the Permanent Mandates Commission declared that the White Paper was incompatible with the mandate, and that the Secretary of State was charged with turning the mandate upside down, would it not be better for all parties if the report of the proceedings was published at once?

Mr. MacDonald: When the report of the Permanent Mandates Commission is completed and published the hon. Member is very likely to discover that his information is incorrect. With regard to the question of early publication it is important that the publication of the report should not be delayed longer than is essential or necessary, but clearly it is impossible to contemplate the date of publication before the report is completed.

Mr. Williams: May the House be assured that the report will be published before the House adjourns early in August, so that no further steps may be taken by His Majesty's Government in

regard to the League Council until this House has been able to express itself on the report?

Mr. MacDonald: I have made inquiries into the possibilities, and they have led me to a conclusion which makes it impossible for me to give an assurance. I should be very doubtful whether, if proper time is allowed for consideration of the report, it would be possible to get through the physical business of publication before the beginning of August. With regard to the second part of the question, this is not the report on which action is taken by His Majesty's Government in regard to this policy, except after consideration by the League Council. It is a report to the League Council and the appropriate next step would be discussed with the League Council.

Mr. Arthur Greenwood: In view of what is now perfectly obvious from the "public Press that there is likely to be a difference of opinion between the Permanent Mandates Commission and His Majesty's Government and in view of the delay that there is bound to be before the Council has this matter before them, will the right hon. Gentleman give an undertaking that he will take no action prior to discussion in this House?

Mr. MacDonald: His Majesty's Government have not taken any action prior to discussion in this House. There has been discussion in this House, and the policy of the White Paper was approved by this House. Therefore, action has only been taken following discussion and decisions in this House.

Mr. Greenwood: I must press the right hon. Gentleman on this matter. That is perfectly true. On the other hand, the House did not know then the views of the Mandates Commission, nor does it now. The question I am asking the right hon. Gentleman is this: After the matter has been before the Council of the League, will he stay his hand with regard to any definite action until this House has had an opportunity of discussing the report of the Mandates Commission and the decision of the League Council?

Mr. MacDonald: As the right hon. Gentleman appreciates, the point which will arise is not one between members of the Permanent Mandates Commission and His Majesty's Government, because


the members of the Permanent Mandates Commission report to the Council. The discussion will be between the Council of the League and His Majesty's Government. Certainly, I will give an assurance to the House that if, as a result of a discussion by the Council, the situation regarding the policy is altered, His Majesty's Government will not proceed with any matter affected by that situation until there has been a further chance of the House expressing its views.

Mr. Greenwood: I am sorry still further to press the right hon. Gentleman, but that is only a 50 per cent, answer. I am asking the right hon. Gentleman whether, whatever may be the result of the discussions between the League Council and His Majesty's Government, no action will be taken with regard to Palestine before the matter is discussed by the-Members of this House.

Mr. MacDonald: I certainly could not give that assurance. Let us assume for a moment that the League Council approves of the policy being pursued by His Majesty's Government. As that policy has already been approved by this House, I can see no reason in those circumstances for going back on the policy. What I do say is, that if any decision reached by the Council suggests any modification in the policy which has been approved by this House, then certainly His Majesty's Government will feel it necessary to come before this House again before taking further action with regard to this particular matter.

Mr. Mander: In view of the fact that the reply of the Minister was given to my original question, may I be permitted now to put one supplementary?

Mr. Speaker: The reply was not given to the hon. Member alone, but also to the questions of other hon. Members.

Mr. Mander: They were all taken together. May I ask the right hon. Gentleman whether he is able to deny the statement which has appeared in the world's Press to the effect that five out of seven members of the Permanent Mandates Commission have condemned the British Government's policy, and that during the course of the proceedings he withdrew the Hogarth message as the result of the discussions which took place there?

Mr. MacDonald: Obviously, I have no authority to speak on behalf of the Permanent Mandates Commission—

Mr. Mander: Can you deny that?

Mr. MacDonald: —nor can I foreshadow what is in their report.

Mr. Mander: Do you not know?

Mr. MacDonald: All that I ventured to suggest was that when the hon. Member for the Don Valley (Mr. T. Williams) has a chance of studying the report after publication he will very likely find that his information is incorrect, and I think that I can give the same reply to the hon. Member for East Wolverhampton (Mr. Mander).

Mr. T. Williams: On account of the unsatisfactory nature of the right hon. Gentleman's reply, I beg to give notice that I shall raise the matter on the Adjournment.

ECONOMIC DEVELOPMENT, SCOTLAND.

Mr. Davidson: asked the Prime Minister whether he intends in the near future to set up a Royal Commission to inquire into, and make recommendations on, the economic and agricultural development of Scotland?

The Prime Minister: I am not in a position to add to the reply which was given to the hon. Member's question on 22nd March last.

Mr. Davidson: Is the right hon. Gentleman aware that this reply will create great dissatisfaction at the Convention of Scottish Nationalists to be held in the near future? Does he not think it is a bad thing for this country to have many people in Scotland dissatisfied with the way that the Government are controlling things here?

FOREIGN MILITARY OFFICERS (VISITS).

Lieut.-Colonel Sir Thomas Moore: asked the Prime Minister whether he will consider issuing invitations through the appropriate Departments to distinguished officers of the fighting forces of Germany and Italy, and any other country considered desirable, to visit Britain in the near future and see our defence forces and establishments at work?

The Prime Minister: It has been the custom from time to time for distinguished officers of the fighting forces of foreign countries to visit this country for the purpose of seeing our Service establishments, and this practice is being continued.

Sir T. Moore: Would my right hon. Friend not consider extending the practice to both senior and distinguished officers of these various countries, because of the fact that, in our opinion, it might tend to remove misunderstandings and doubts—

Mr. Speaker: That is a very long supplementary.

Mr. Kirkwood: Is the Prime Minister aware that in June, 1914, there was a big deputation to this country from Germany, both from the Admiralty and the Army and from Krupps' works, but that the War broke out in August, 1914?

HOUSE OF COMMONS (RE-ASSEMBLY).

Mr. V. Adams: asked the Prime Minister whether, since the House of Commons will shortly be separating for a period which is certain to be critical internationally, he has in contemplation any other methods than the conventional channels of re-summoning the House?

The Prime Minister: No, Sir.

Mr. Adams: Does my right hon. Friend recall that last year the most serious developments occurred when this House was up and was unable to exercise its duty of influencing the executive?

The Prime Minister: Last year the House was called together before the expiration of the actual period.

Mr. Adams: Are we likely to be in session when another congress is in progress at Nuremberg?

COLONIES.

Mr. Sorensen: asked the Prime Minister whether, in order to minimise the chances of war arising from inter national rivalry for colonies as purely national possessions, he will make a statement of the means by which the Government propose to carry out their policy to

proceed as far upon the economic side as has already been done on the political side, in making wider application of the principles which now obtain in the mandated territories?

The Prime Minister: If the hon. Member will read the speech recently made by my Noble Friend the Secretary of State for Foreign Affairs as a whole, he will see that the suggestion mentioned in the question is contingent upon the attainment of some agreement on common methods and aims of Colonial development. This being so, it is obviously premature for His Majesty's Government to make any statement of the kind which the hon. Member suggests.

Mr. Sorensen: While appreciating the Prime Minister's reply and the contingencies to which he has referred, might I ask whether it would not be valuable to the whole world to know what are our principles in regard to colonies, in respect of this country and other countries, too, and is he aware that, in fact, the Labour party has put forward its policy on this question?

The Prime Minister: I am not aware that it has produced any effect.

QUESTIONS TO MINISTERS.

Sir John Mellor: asked the Prime Minister whether he has directed any alteration in the practice of treating questions relating to the service of foreign loans issued in the United Kingdom as Foreign Office questions, and whether in future such questions should be addressed to the Chancellor of the Exchequer?

The Prime Minister: No, Sir. The decision as to which Minister should reply to any hon. Member's question about foreign loans must depend on the terms of the question.

Sir J. Mellor: Does not that reply place hon. Members in a certain difficulty in considering on which day they should seek a reply to questions of this character?

The Prime Minister: My hon. Friend will be able to get information at the Table as to the Minister to whom he should address his questions.

Oral Answers to Questions — FOOD DEFENCE PLANS.

FEEDING-STUFFS (CATTLE).

Mr. De la Bère: asked the Chancellor of the Duchy of Lancaster whether he will consider financing a scheme for feeding-stuffs for cattle on somewhat similar lines to the scheme which the Government are now operating for the storage of wheat?

The Chancellor of the Duchy of Lancaster (Mr. W. S. Morrison): The scope of the Government scheme for reserves of essential commodities is under constant review, including the case of animal feeding-stuffs and I will bear my hon. Friend's suggestion in mind.

Mr. De la Bère: Is my right hon. Friend aware that constant review carries us nowhere, and will he give us some assurance that there is some definite, concrete, crystallised plan?

RESERVES.

Mr. Anstruther-Gray: asked the Chancellor of the Duchy of Lancaster whether he can give an assurance that there are no essential commodities of which there is not a supply in this country sufficient for at least three months without imports?

Mr. W. S. Morrison: In the case of nearly all essential raw materials, the trade stocks and Government reserves are more than adequate for three months' consumption on the basis of estimated war requirements, and in the few cases where this not so, the necessary steps are being taken to cover the position. As regards foodstuffs, I can assure my hon. Friend that, wherever practicable, stocks have been or are being brought up to at least the standard mentioned in the question.

Mr. Loftus: How much of the three months' stock is trade stock, and how much has been purchased by my right hon. Friend's Department?

Mr. Morrison: I could not give that information. I am able to give the general assurance asked for in the question, but could not give particulars without danger to the public interest.

Mr. Shinwell: Are we to understand that the Government's policy is limited to three months' supply?

Mr. Morrison: I never said that.

Mr. Tinker: asked the Chancellor of the Duchy of Lancaster whether, in the food defence plans, steps are being taken to enable old age pensioners to have reserves of foodstuffs so that in an emergency they would be in a position similar to the rest of the population who have been advised by him to build up reserves of essential foodstuffs?

Mr. Morrison: No special arrangements of the kind suggested by the hon. Member are in contemplation. The Government's plans, for the maintenance of adequate supplies of foodstuffs for the country and for their proper distribution, are farmed generally and for all sections of the community alike. In these plans no account is taken of the reserves which may be accumulated by householders in advance of an emergency. I regard these reserves as an additional source of security, which may be particularly useful in relieving any temporary strain on local distribution, such as might arise owing to the sudden influx of population in reception areas. I should hope that in the event of such a strain persons who have been able to provide reserves in their homes would use them with a view to relieving, in the common interest, the pressure on the shops for the time being.

Mr. Tinker: May I ask the right hon. Gentleman whether, in considering this important question, he will keep in mind the fact that there are 230,000 old age pensioners who have to apply for Poor Law relief every week, and that it is impossible for them to get in any reserves at all; and I would ask the Government to bear that in mind?

Mr. Morrison: I am aware that there are many people who cannot accumulate reserves not only because of lack of means, but, in many cases, because of lack of accommodation. The Government plans are framed to give equal distribution to all sections alike.

Mr. George Griffiths: Did not the Prime Minister's letter yesterday give to these old age pensioners tremendous hope for the future?

WHEAT STORAGE.

Mr. De la Bère: asked the Chancellor of the Duchy of Lancaster whether,


in connection with the Government's reserve wheat storage plan, he can give the names of the advisory committee who have been appointed to decide on the question of deterioration of these reserves and the necessity for replacement, and whether he can give an assurance that the members of this committee are entirely unconnected with the milling concerns who are carrying out the Government's wheat-storage scheme?

Mr. W. S. Morrison: As I indicated in the reply which I gave to my hon. Friend on 5th July, the decision to replace any particular part of the Government wheat reserve is taken by the Food (Defence Plans) Department. The Department take the decision after a report has been received from the firm of Cargo Superintendents, and after consultation with the advisory committee. The membership of the advisory committee is as follows:

Mr. Arthur Robinson (Chairman), Sir Norman Vernon, Bt., Mr. J. V. Rank, Mr. J. McFadyen representing the milling concerns, and two representatives of the Food (Defence Plans) Department.

Mr. De la Bère: Does my right hon. Friend realise that some of these gentlemen are directly interested in this business, and is he not aware that this matter is really a grave scandal?

Mr. Morrison: As my answer indicated, I am aware that these gentlemen whose names I mentioned assist the Government on this committee and represent the firms which do the work for the Government; but I am quite unaware of what is stated in the second part of the question—indeed, I am able to deny it categorically.

Mr. De la Bère: This is a matter of the utmost importance. Is my right hon. Friend not aware that this sort of thing cannot be allowed to go on, and that I will not sit still and see it go on?

JAPANESE CANNED SALMON.

Mr. Logan: asked the Chancellor of the Duchy of Lancaster whether he is aware that there are stored in Liverpool 250,000 cases of Japanese salmon, each case containing 96 tins unlabelled; is this storage intended for emergency rations; and will he see that the tins are labelled with the place of origin before he issues them to the public?

Mr. W. S. Morrison: As my right hon. Friend the President of the Board of Trade stated on 27th June, the Food (Defence Plans) Department has not purchased and has no intention of purchasing any Japanese canned salmon. There is, therefore, no question of the Department issuing Japanese salmon to the public.

Mr. Logan: Is the right hon. Gentleman aware that these goods are sold in Liverpool, and is he able to confirm the statement made yesterday by the President of the Board of Trade, when he said:
where unlabelled tins of foreign produce bear the word 'Can' at the time of importation, they are not released from Customs charge unless an indication of origin is also affixed."—[OFFICIAL REPORT, 11th July, 1939; col. 2075, Vol. 349.]
Is it not correct that these cans are there in their millions, and, if they are not Government stores, I want to know what they are doing in Liverpool? I have in my hand a can out of the store?

Mr. Morrison: All that I can say is that none of these cans are mine. If the hon. Gentleman has any question to ask about labelling and marking, that is not a matter for my Department.

Mr. Logan: When I put down this question it was transferred to this particular Department. I hardly thought that that was right and proper on an important question like this. [Laughter.] It is no laughing matter. An erroneous statement was made yesterday by the Minister responsible in this matter, and I want to ask whether —

Mr. Speaker: The hon. Member is making a statement.

Mr. Logan: On a point of Order. I wished to put this question to the responsible Minister, and I was told at the Table that it was one for the right hon. Gentleman to answer. I am now getting no answer, and I have incontrovertible evidence that there is a ramp in millions of these tins going on in the City of Liverpool. I want to know, Mr. Speaker, whether I may have the privilege of putting a question to the right and proper Minister now?

Mr. Speaker: The hon. Member had better put down another question.

COLD STORAGE ACCOMMODATION.

Major Milner: asked the Chancellor of the Duchy of Lancaster why the Government are pot making full use of the considerable cold-storage accommodation available in this country, particularly outside London?

Mr. W. S. Morrison: I assume that the hon. Member has in mind the use of cold storage accommodation for reserves acquired under the Essential Commodities Reserves Act. The cost of storage is one factor which is considered in connection with the selection of foodstuffs and in which cold storage shows at a disadvantage. Edible oils, canned meat and canned fish, for example, are being stored at a cost much less than that of cold storage.

Major Milner: Is it not the fact that not 50 per cent, of the cold storage accommodation is now being made use of, and that there are many commodities which could be satisfactorily stored there?

Mr. Morrison: I told the hon. Gentleman that the question of cost had to be taken into account, and the object is, in general, to secure the highest possible food value for the money expended. The cost of cold storage is enormously greater than the other methods of storage to which I have referred, and I am aware that there is an excess of cold storage accommodation at the present time.

Major Milner: Is it not the fact that food storage accommodation is being reduced year by year because the Government are not taking advantage of it?

SILICOSIS.

Mr. James Griffiths: asked the Pay master-General, as representing the Lord President of the Council, what progress has been made by the committee investigating the incidence of silicosis in the anthracite coalfield; and whether he can indicate when their investigations will be completed and their findings published?

The Paymaster-General (Earl Winterton): The work is proceeding satisfactorily on the lines indicated in my replies to the hon. Member of 23rd February and 19th April. The second phase of the investigation has been completed, five collieries in the anthracite

area and two in the steam coal area having been examined. The results are now being analysed, and show the need for extending the investigation to a small number of other collieries of different types. Arrangements have been made to do this in the autumn, and it is hoped that the whole of the field work will be completed before the end of the year.

Mr. Griffiths: Is the right hon. Gentleman aware that the incidence of silicosis still increases, and that for the first six months of this year it shows an increase over the comparable period of last year; and in view of the reply which he has given that the field work will not be completed until some time in the autumn, and presumably there will be long discussion after that, can he give any indication when the report will be completed, and will he take steps to expedite it?

Earl Winterton: I fully sympathise with the importance which the hon. Gentleman attaches to this matter, and, with the approval of the Lord President, I am satisfied that there has been no avoidable delay. It is a very difficult and intricate matter, and I cannot give any indication when the final report will be received, because after the field work is completed, which, I hope, will be by the end of the autumn, time will be required for some analysis to be made.

Mr. Griffiths: Has the right hon. Gentleman satisfied himself that this investigation has not been unduly delayed because of the shortage of personnel in the committee?

Earl Winterton: Yes, Sir; I am very pleased that the hon. Member has asked that question, which is a very proper one to ask. I am convinced that there has been no avoidable delay, and, in fact, you cannot hurry an investigation of this sort.

CYPRUS (ARCHBISHOPRIC).

Mr. Hannah: asked the Secretary of State for the Colonies whether he can hold out any hope of an early settlement of the difficulties in connection with the Cyprus archbishopric?

Mr. M. MacDonald: I can give no indication as to when the present difficulties in regard to the election of an Archbishop in Cyprus are likely to be resolved. I am,


however, anxious to see the existing deadlock resolved, and am considering what steps can usefully be taken by the Government to that end.

Mr. Hannah: Is it not to be hoped that with the appointment of a new Governor of Cyprus this matter may be speedily settled, both from the point of view of the Autocephalous Church and of British prestige throughout the Levant?

Mr. MacDonald: It is a matter to which I have asked the new Governor to give special attention when he arrives in the Island.

Mr. Mander: Is there no one in the Government Whips' Office suitable for this job?

SARAWAK (DEFENCE).

Captain Plugge: asked the Secretary of State for the Colonies to what extent the British Government is pledged, in case of emergency, to protect the existence of Sarawak; and whether the Government of Sarawak has ever made any contribution to the maintenance of the British Defence Forces?

Mr. M. MacDonald: Under the Agreement of 1888 it was provided that the State of Sarawak should continue to be governed and administered as an independent State under the protection of Great Britain. As regards the second part of the question, no British Defence Forces are maintained in Sarawak, and, therefore, no question has arisen of a contribution being made from Sarawak funds for the purpose mentioned.

Captain Plugge: Can the right hon. Gentleman say whether there are any facilities for the Navy and the Air Force in Sarawak?

Mr. MacDonald: That is another question. Perhaps the hon. and gallant Member will put it down to the appropriate Minister.

INCOME TAX (SICKNESS AND DISABLEMENT BENEFIT).

Mr. Greenwood: (by Private Notice) asked the Chancellor of the Exchequer whether he proposes to take any action with respect to the decision of the Special Commissioners for Income Tax that sick-

ness and disablement benefit from approved and friendly societies, trade unions and other bodies are liable to Income Tax?

The Chancellor of the Exchequer (Sir John Simon): I saw certain comments on this matter which were communicated to the Press this morning but I am informed that they are materially inaccurate. The decision referred to involves no new point of principle at all. Nor is the practice changed. Income Tax, where due in such cases, is not and will not be deducted at the source. The actual case was that a permanently disabled individual with a not inconsiderable private income which is supplemented by substantial payments derived from an insurance company and a friendly society. His total income is much above the exemption limit and the payments, which are treated by the Special Commissioners as in the nature of annuities, have continued for some years. It is not the practice to charge benefits for periods of less than a year, no recipient with an income under exemption limits can be affected and no new field of taxation is opened by the decision. I may add that benefits under the National Health Insurance Acts and Unemployment Insurance benefits are not treated as liable to Income Tax, nor will they be.

Mr. Greenwood: Will the right hon. Gentleman cause to be produced before the House, if possible to-day, the actual statement of the ruling of the Special Commissioners, because, as I understand it, the statement that appears in the Press is somewhat in conflict with the statement that he has made.

Sir J. Simon: It certainly is in complete conflict with the statement that I have made. What has been communicated to the Press suggests that some general ruling has been laid down which applies to trade unions and other things. Nothing of the sort has been done. It is a decision about an individual case affecting a gentleman of not inconsiderable income, and there is no ground whatever for saying that any new principle is involved.

Mr. Greenwood: Would it not be true to say now that the ruling and the decision in the case of this particular individual will govern the cases of a very large number of other people with not such substantial incomes, who may suffer


and will suffer in the future from hardship because, as I understand the ruling, any income that they get from approved societies or trade unions, as the case may be, will be assessable for Income Tax purposes?

Sir J. Simon: There has been no general ruling either in regard to income from trade unions or any of the other bodies mentioned. This was a particular case which was decided by the Special Commissioners as a particular case. It is quite certain that it does not involve any new principle at all, but it has led to a misapprehension which I regret should have been created by the communication to the Press.

Mr. Greenwood: The right hon. Gentleman will recognise that this question does not apply to taxation at the source. Is it not the case that this particular ruling creates a precedent under which large numbers of individuals may in future suffer hardship?

Sir J. Simon: I really think not. I understand that the Commissioners merely confirmed the assessments. Each case is decided on the facts of the case. The position is exactly the same as in 1925 or any later year, and it is a complete confusion to suppose that some new principle is involved.

Mr. Rhys Davies: The right hon. Gentleman has admitted in his statement that disablement benefit paid by benefit societies will come in for Income Tax purposes. Does he not see that such disablement benefit is simply in the nature of a return of contributions paid for the benefit?

Sir J. Simon: I am afraid that the hon. Member has not followed my statement. I have not made any such admission. In the present case the taxpayer was a person drawing a supplement to his income and had done so for years, not in consequence of National Insurance or any similar Act, but as the result of a private contract with an insurance company, and with, I think, a friendly society, and on the facts of that case the Commissioners thought that what he was receiving was an annuity. He had received it for years. This has no application to the ordinary case of receiving temporary benefits from Grade unions or friendly societies.

Mr. Buchanan: In view of the fact that the decision has created some apprehension among trade unions who pay superannuation benefit, and have done for some years, will the right hon. Gentleman make available in full the decision arrived at in order that we may examine it and see its implications?

Sir J. Simon: I have done my best to make the position clear, and I shall have an opportunity of getting more information. I am quite certain that those who have informed me are accurate about this case. I do not think it is usual to publish the details of an individual case, and it is for that reason that I have not given the actual figures of income.

Mr. Buchanan: In view of the fact that one decision given by an officer governs the cases of other people, will the right hon. Gentleman, without disclosing the man's name, make available the decision arrived at in order that we may examine its implications?

Sir J. Simon: I really think the House should be prepared to accept the statement I have made. Anxiety was aroused by the statement in the Press. I noticed the statement before I got the question put to me and I made inquiries this morning, and I have seen those who are responsible. I am perfectly satisfied that the statement I have made is right. It is quite contrary to practice to publish the details of individual cases before the Special Commissioners, and I think it is the law that I should not do so. The law has not been altered in the least, and those who are exercised about trade unions may sleep comfortably in their beds.

Mr. Benn: Has the right hon. Gentleman formed any estimate of how much the Treasury will receive as a result of the decision of the Special Commissioners?

Sir J. Simon: It may amount to a few shillings.

Mr. Benn: I am not talking about this particular case.

Sir J. Simon: It is a decision which is exactly in accord with what has been the practice for the last 10 or 12 years.

Mr. Logan: In regard to the ordinary contributions for National Health Insurance and special voluntary contributions,


am I to take it that additional benefits or any benefits which come from sickness will not be taxable in regard to Income Tax?

Sir J. Simon: I do not think the decision deals with that, but I am sure the hon. Member is right when he speaks of benefits which arise under the national health Acts or the Unemployment Insurance Act. I am not precisely informed about the other case, but, in any event, nobody can be touched by this provision unless they are over the Income Tax exemption limit.

Mr. Buchanan: Is the right hon. Gentleman not aware that trade unions and others have been paying superannuation benefits year after year, and that the sums in the past have not been counted in for Income Tax purposes; and that this decision makes that amount liable for Income Tax?

Sir J. Simon: The hon. Member has just said that these trade union benefits have not been taxed in the past. I will undertake that there will be no change in administration in the future.

Sir T. Moore: In view of the precedent which has now been established, may I complete my interrupted supplementary question?

Mr. Speaker: Neither at this time nor at any other time.

BUSINESS OF THE HOUSE.

Mr. Greenwood: Can the Prime Minister tell us how far he proposes to go to-night in the event of the 11 o'clock Rule being suspended?

The Prime Minister: We hope to make good progress to-day and to complete the business up to and including the Motion with respect to Greenwich Hospital and Travers' Foundation.

Motion made, and Question put,
That the Proceedings on Government Business be exempted, at this day's Sitting, from the provisions of the Standing Order (Sittings of the House)."— [The Prime Minister.]

The House divided: Ayes, 241; Noes, 137.

Division No. 237.]
AYES.
[3.59 p.m.


Acland-Troyte, Lt.-Col. G. J.
Channon, H.
Entwistle, Sir C. F.


Adam, S. V. T. (Leeds, W.)
Chapman, A. (Rutherglen)
Errington, E.


Albery, Sir Irving
Chapman, Sir S. (Edinburgh, S.)
Erskine-Hill, A. G.


Allen, Col. J. Sandeman (B'knhead)
Chorlton, A. E. L.
Evans, Colonel At (Cardiff, S.)


Anderson, Sir A. Garrett (C. of Ldn.)
Christie, J. A.
Evans, D. O. (Cardigan)


Anderson, Rt. Hn. Sir J. (So'h Univ's)
Churchill, Rt. Hon. Winston S.
Fildes, Sir H.


Anstruther-Gray, W. J.
Clarke, Colonel R. S. (E. Grinstead)
Fleming, E. L.


Aske, Sir R. W.
Clarry, Sir Reginald
Furness, S. N.


Assheton, R.
Clydesdale, Marquess of
Gibson, Sir C. G. (Pudsey and Olley)


Balfour, Capt. H. H. (lsle of Thanet)
Cobb, Captain E. C. (Preston)
Gilmour, Lt.-Col. Rt. Han. Sir J.


Barrie, Sir C. C.
Colman, N. C. D.
Gluckstein, L. H.


Beamish, Rear Admiral T. P. H.
Colville, Rt. Hon. John
Glyn, Major Sir R. G. C.


Beauchamp, Sir B. C.
Conant, Captain R. J. E.
Goldie, N. B.


Beaumont, Hon. R. E. B (Portsm'h)
Cook, Sir T. R. A. M. (Norfolk, N.)
Gower, Sir R. V.


Bennett, Sir E. N.
Cooke, J. D. (Hammersmith, S.)
Graham, Captain A. C. (Wirral)


Bernays, R. H.
Cooper, Rt.Hn. A. Duff (W'st'r S.G'gs)
Granville, E. L.


Bird, Sir R. B.
Cooper, Rt. Hn. T. M. (E'nburgh, W.)
Grattan-Doyle, Sir N.


Blair, Sir R.
Croft, Brig.-Gin. Sir H. Page
Gridley, Sir A. B.


Boothby, R. J. G.
Crookshank, Capt. Rt. Hon. H. F. C.
Grimston, R. V.


Boulton, W. W.
Crossley, A. C.
Gritten, W. G. Howard


Bower, Comdr. R. T.
Crowder, J. F. E.
Guinness, T. L. E. B.


Brass, Sir W.
Cruddas, Col. B.
Gunston, Capt. Sir D. W.


Briscoe, Capt. R. G.
Culverwell, C. T.
Hannah, I. C.


Broadbridge, Sir G. T.
Davison, Sir W, H.
Hannon, Sir P. J. H.


Brocklebank, Sir Edmund
De Chair, S. S.
Harbord, Sir A.


Brawn, Brig.-Gen. H. C. (Newbury)
De la Bère, R.
Harvey, T. E. (Eng. Univ's.)


Browne, A. C. (Belfast, W.)
Denman, Hon. R. D.
Haslam, Henry (Horncastle)


Bull, B. B.
Denville, Alfred
Haslam, Sir J. (Bolton)


Bullock. Cap. M.
Despencer-Robertson, Major J. A. F.
Heilgers, Captain F. F. A. -


Burgin, Rt. Hon. E. L.
Doland, G. F.
Hely-Hutchinson, M. R.


Butcher, H. W.
Donner, P. W.
Hepburn, P. G. T. Buchan*


Butler, Rt. Hon. R. A.
Dorman Smith, Col. Rt. Hon. Sir R. H.
Hepworth, J.


Caine, G. R. Hall-
Drewe, C.
Higgs, W. F.


Campbell, Sir E. T.
Dugdale, Captain T. L.
Hoare, Rt. Hon. Sir S.


Cartland, J. R. H.
Duncan, J. A. L.
Holdsworth, H.


Carver, Major W. H.
Eastwood, J. F.
Holmes, J. S.


Cary, R. A.
Edmondson, Major Sir J.
Hudson, Capt. A. U. M. (Hack., N.)


Cazalet, Thelma (Islington, E.)
Elliston, Capt. G. S.
Hudson, Rt. Hon. R. S. (Southport)


Cazalet, Capt. V. A. (Chippenham)
Emmott, C. E. G. C.
Hulbert, Squadron-Leader N. J.


Chamberlain, Rt. Hn. N. (Edgb't'n)
Emrys-Evans, P. V.
Hunloke, H. P.




Hunter, T.
O'Connor, Sir Terence J.
Spans. W. P.


Hurd, Sir P. A.
Orr-Ewing. I. L.
Stanley, Rt. Hon. Oliver (W'm'ld)


Jennings, R.
Palmer. G. E. H.
Stewart, J. Henderson (Fife, E.)


Jonas, Sir H. Haydn (Merioneth)
Peake, O.
Strauss, H. G. (Norwich)


Jones, L. (Swansea W.)
Peat, C. U.
Strickland, Captain W. F.


Keeling, E. H.
Perkins, W. R. D.
Stuart, Hon. J. (Moray and Nairn)


Kellett, Major E. O.
Peters, Dr. S. J.
Sueter, Rear-Admiral Sir M. F.


Kerr, Colonel C. I. (Montress)
Pickthorn, K. W. M.
Sutcliffe, H.


Kerr, Sir John Graham (Sco'sh Univs.)
Pilkington, R.
Tasker, Sir R. I.


Lamb, Sir J. Q.
Plugge, Capt, L. F.
Tate, Mavis C.


Lambert, Rt. Hon. G.
Ponsenby, Col. C. E.
Taylor, Vice-Adm. E. A. (Padd., S.)


Loach, Sir J. W.
Pownall, Lt.-Col. Sir Assheton
Thomas, J. P. L.


Laos-Jones, J.
Proctor, Major H. A.
Thornton, Sir J. D. W.


Leighton, Major B. E. P.
Radford, E. A.
Thornton-Kemsley, C. N.


Levy, T.
Ramsay, Captain A. H. M.
Titchfield, Marquess of


Liddall, W. S.
Ramsden, Sir E.
Touche, G. C.


Lindsay, K. M.
Rankin, Sir R.
Tryon, Major Rt. Hon. G. C.


Lloyd, G. W.
Rathbone, Eleanor (English Univ's.)
Tufnall, Lieut.-commander R. L.


Loftus, P. C.
Reed, A. C. (Exeter)
Wallace, Capt. Rt. Hon. Euan


Mabane, W. (Huddersfield)
Rickards, G. W. (Skipten)
Ward, Lieut.-Col. Sir A. L. (Hull)


MacAndrew, Colonel Sir C. G.
Ropner, Colonel L.
Ward, Irene M. B. (Wallsend)


MacDonald, Rt. Hon. M. (Ross)
Rosbotham, Sir T.
Wardlaw-Milne, Sir J. S.


Macdonald, Capt. P. (Isle of Wight)
Ross Taylor, W. (Woodbridge)
Warrender, Sir V.


McEwen, Capt. J. H. F.
Royds, Admiral Sir P. M. R.
Webbe, Sir W. Harold


Maitland, Sir Adam
Ruggles-Brise, Colonel Sir E. A.
Wedderburn, H. J. S.


Makins, Brigadier-General Sir Ernest
Russell, S. H. M. (Darwen)
Wells, Sir Sydney


Margesson, Capt. Rt. Hon. H. D. R.
Salmon, Sir I.
Whiteley, Major J. P. (Buckingham)


Markham, S. F.
Salt, E. W.
Williams, Sir H. G. (Croydon, S.)


Maxwell, Hon. S. A.
Salter, Sir J. Arthur (Oxford U.)
Willoughby de Eresby, Lord


Mellor. Sir J. S. P. (Tamworth)
Samuel, M. R. A.
Wilson, Lt.-Col. Sir A. T. (Hitchin)


Mills, Sir F. (Layton, E.)
Sandeman, Sir N. S.
Windsor-Clive, Lieut.-Colonel G.


Mills, Major J. D. (New Forest)
Sanderson, Sir F. B.
Winterton, Rt. Hon. Earl


Mitchell, Sir W. Lane (Streatham)
Schuster, Sir G. E.
Wise, A. R.


Mitcheson, Sir G. G.
Scott, Lord William
Wood, Rt. Hon. Sir Kingsley


Moore, Lieut.-Col. Sir T. C. R.
Selly, H. R.
Wright, Wing-Commander J. A. C.


Mooring, A. C.
Shaw, Captain W. T. (Forfar)
York, C.


Morgan, R. H. (Worcester, Stourbridge)
Shepparson, Sir E. W.
Young, A. S. L. (Partick)


Morris-Jones, Sir Henry
Shute, Colonel Sir J. J.



Morrison, G. A. (Scottish Univ's.)
Simon, Rt. Hon. Sir J. A
TELLERS FOR THE AYES.—


Nall, Sir J.
Smith, Bracewell (Dulwich)
Captain Waterhouse and Mr.


Neven-Spence, Major B. H. H.
Smith, Sir R. W. (Aberdeen)
Munro.


Nicolson, Hon. H. G.
Snadden, W. McN.





NOES.


Adams, D. (Consett)
Gallacher, W.
MacLaren, A.


Adams, D. M. (Poplar, S.)
Gardner, B. W.
Maclean, N.


Adamson, Jennie L. (Dartford)
Garro Jones, G. M.
Mainwaring, W. H.


Adamson, W. M.
George, Megan Lloyd (Anglesey)
Mander, G. le M.


Alexander, Rt. Hon. A. V. (H'lsbr.)
Gibson, R. (Greenock)
Marshall, F.


Ammon, C. G.
Green, W. H. (Deptford)
Mathers, G.


Anderson, F. (Whitehaven)
Greenwood, Rt. Hon. A.
Maxton, J.


Banfield, J. W.
Grenfell, D. R.
Messer, F.


Barnes, A. J. 
Griffith, F. Kingsley (M'ddl'sbro, W.)
Milner, Major J.


Barr, J.
Griffiths, G. A. (Hemsworth)
Montague, F.


Batey, J.
Griffiths, J. (Llanelly)
Morrison, R. C. (Tottenham, N.)


Beaumont, H. (Batley)
Hall G. H. (Aberdare)
Naylor, T. E.


Bellenger, F. J.
Hall, J. H. (Whitechapel)
Noel-Baker, P. J.


Benn, Rt. Hon. W. W.
Hardie, Agnes
Paling, W.


Benson, G.
Harris, Sir P. A.
Parkinson, J. A.


Bevan, A.
Hayday, A.
Pearson, A.


Broad, F. A.
Henderson, A. (Kingswinford)
Pethick-Lawrence, Rt. Hon. F. W.


Bromfield, W.
Henderson, J. (Ardwick)
Price, M. P.


Brown, C. (Mansfield)
Henderson, T. (Tradeston)
Quibell, D. J. K.


Buchanan, G.
Hills, A. (Pontefract)
Richards, R. (Wrexham)


Burke, W. A.
Hopkin, D.
Ridley, G.


Cape, T.
Jenkins, A. (Pontypool)
Riley, B.


Charleton, H. C.
Jenkins, Sir W. (Neath)
Ritson, J.


Chater, D.
John, W.
Roberts, W. (Cumberland. N.)


Cluse, W. S.
Jones, A. C. (Shipley)
Robinson, W. A. (St. Helens)


Collindridge, F.
Kennedy, Rt. Hon. T.
Rothschild, J. A. de


Cove, W. G.
Kirby, B. V.
Sanders, W. S.


Daggar, G.
Kirkwood, D.
Sexton. T. M.


Dalton, H.
Lathan, G.
Shinwell, E.


Davidson, J. J. (Maryhill)
Leach, W.
Silkin, L.


Davies, R. J. (Westhoughton)
Lee, F.
Silverman, S. S.


Davies, S. O. (Merthyr)
Leonard, W.
Simpson, F. B.


Day, H.
Leslie, J. R.
Sinclair, Rt. Hon. Sir A. (C'thn's


Dobbie, W.
Logan, D. G.
Sloan, A.


Dunn, E. (Rother Valley)
Lunn, W.
Smith, Ben (Rotherhithe)


Ede, J. C.
Macdonald, G. (Into)
Smith, E. (Stoke)


Edwards, Sir C. (Bedwellty)
McEntee, V. La T.
Smith, Rt. Hon. H. B. Leas (K'ly).


Edwards, N. (Caerphilly)
McGhee, H. G.
Smith, T. (Normanton)


Fletcher, Lt.-Comdr. R. T. H.
McGovern, J.
Sorensen, R. W.







Stephen, C.
Viant, S. P.
Williams, T. (Don Valley)


Stewart, W. J. (H'ghlt'n-le-Sp'ng)
Walkden, A. G.
Wilmot, John


Stokes, R. R.
walker, J,
Windsor, W. (Hull, C.)


Strauss, G. R. (Lambeth, N.)
Watkins, F. C.
Woods, G. S. (Finsbury)


Taylor, R. J. (Morpeth)
Watson, W. McL.



Thorne, W.
Wedgwood, Rt. Hon. J. C.
TELLERS FOR THE NOES. —


Thurtle, E.
Welsh J. C.
Mr.Whiteley and Mr. Groves.


Tinker, J. J,
Westwood, J.



Question put, and agreed to.

DOCKING AND NICKING OF HORSES (PROHIBITION).

Sir Ralph Glyn: I beg to move,
That leave be given to bring in a Bill to prevent the docking and nicking of horses and importation of docked and nicked horses.
It will be unnecessary to take up the time of the House by any lengthy argument. It is, I think, sufficient to say that a similar Bill passed through all its stages in another place last Session and that it was during the progress of the Bill in another place that certain Amendments were made which the promoters of this Bill intend to adopt. The actual operation of docking under the Animals (Anaesthetics) Act of 1919 is happily now illegal, unless performed by a veterinary surgeon, and at the time the animal must be completely subject to the anaesthetic. I want to make it clear that that part of it has been met. But what has not been met is the subsequent torture that animals undoubtedly go through after having been docked when they are out at rest and are subject to the vexation of flies and so on.
We further contend that docking is unnecessary. It has been said that it is fashionable, but at this time it is impossible to feel that one ought to stand for any fashion in which any cruelty is involved. Fashions of the past must disappear if they are bought at such a high price. The only excuse that can be given, as far as I can make out, apart from that of fashion, is that it takes more time to keep an animal clean. In other words that is giving way to laziness and I do not think that it is a sufficient excuse. The other point is that in the anatomy of the horse the fly muscle, as it is called, is by nature extended only halfway down the length of the animal, and nature has ordained that the tail of a horse in its natural state shall be used for keeping off flies and noxious insects from the rest of its body. Hon. Members will recall that when in the country on a hot day or in thundery weather they have seen horses standing head to tail, which is nature's way of

helping co-operative effort to keep the animals free of flies. If, therefore, you dock the tail and the flies sting, the animals get impatient, they stamp, they get fretful and in time the experience breaks down their nervous system and makes them ill-tempered.
I feel, therefore, that in asking the House to agree to the introduction of this Bill we are only setting right something which every country in Europe has adopted, and the fact that there are fewer horses in no way removes the responsibility that we have to see that the horses that remain lead happy and natural lives. The Bill is a short one, and I venture to hope that it will have the unanimous support of the House. The first Clause is one for prohibition of docking. The second Clause provides that there shall be a certificate obtained from a veterinary surgeon if the health of the horse is affected, for instance by some breaking of the vertebrae of the tail which makes it necessary to remove it, or if there has been some disease developed in the tail; in other words, docking in future will be part and parcel of veterinary science for health reasons and health reasons alone. The third Clause is a penalty Clause, which involves a £25 fine or three months' imprisonment. The fourth Clause deals with the importation of animals, and there are certain Amendments which were moved in another place relating to circus horses, animals for stage purposes, and so on. The fifth Clause is the definition Clause, the sixth is the short title, and the seventh proposes that the Act shall come into force on 1st January, 1940.
That, in brief, is what the promoters propose to ask the House to pass. We feel that the Bill will get rid of an ugly, cruel and, indeed, vulgar custom. In conclusion, I would say that in these days when we look round the world there is enough sorrow and suffering and indeed cruelty and I think we should remember that horses serve man, that they are gentle and obedient animals and that the least we can do to dumb creatures is to give


them that treatment for which this country has always been famous. In March at Munich, at a conference of the veterinary services of Europe, it was unanimously agreed that these proposals should be made law. Owing to the rapidity of the passage of laws in totalitarian countries Germany has already adopted the proposals, and I very much regret that we have to be a little bit behind owing to the nature of our procedure. All I ask now is that we should make up for lost time, and I ask the House to give permission for the Bill to be introduced.

Bill ordered to be brought in by Sir Ralph Glyn, Mr. Ralph Beaumont, Sir Ernest Bennett, Mr. S. O. Davies, Sir Robert Gower, Sir John Haslam, Mr. Arthur Henderson, Dr. Howitt, Mr. Maxwell, Lieut.-Colonel Sir Thomas Moore, Lieut.-Colonel Moore-Brabazon, and Mr. Perkins.

DOCKING AND NICKING OF HORSES (PROHIBITION) BILL,

"to prevent the docking and nicking of horses and importation of docked and nicked horses," presented accordingly, and read the First time; to be read a Second time upon Tuesday next, and to be printed. [Bill 197.]

MESSAGE FROM THE LORDS.

That they have agreed to,—
Ministry of Health Provisional Order (Burnham and District Water) Bill,
Ministry of Health Provisional Order (Slough) Bill,
Ministry of Health Provisional Order (Swaffham Water) Bill,
North West Midlands Joint Electricity Authority Provisional Order Bill, without Amendment.

Amendments to —
Milford Haven and Tenby Water Bill [Lords], without Amendment.

CIVIL DEFENCE BILL.

That they have agreed to the Amendments made by the Commons to certain of their Amendments to the Civil Defence Bill, without Amendment.

Orders of the Day — FINANCE BILL.

As amended (in Committee, and on re-committal,) further considered.

4.15 p.m.

Mr. Pethick-Lawrence: On a point of Order, Mr. Speaker. I understand that you do not intend to call the first Amendment and the two consequential Amendments to Clause 20 (Charge of armament profits duty) which appear on the Order Paper in my name, for the reason that you take the view that they are out of order. May I respectfully submit to you certain grounds which, I suggest, show that the Amendment is in order? I understand that the Amendment is ruled out of order on the ground that it might increase the charge. I venture to suggest that it does not increase the charge and that it only cuts through the cumbersome procedure of the Bill. I draw your attention to certain words in the Clause. The Clause states, in Sub-section (1), that the tax is to be placed
on so much of the excess as arises from armament contracts";
and Sub-section (2) states that this excess
shall be ascertained by reference to the proportion which the turnover under armament contracts bears to the total turnover.
It is clear from the wording of the Bill that it is anticipated that this proportion may not give correct results, and, therefore, there are two provisos, which lay down that if that proportion should prove to be unjust, either because it is too great or too small, a different procedure shall be adopted; and that procedure is designed to arrive at a more correct ascertainment of the proportion of the excess profits which is due to armament profits. All that I propose to do in my Amendment is to cut through that cumbersome procedure of first arriving at a proportion which has little connection with the object which it is intended to reach and then subjecting that to a further investigation, and to suggest that the same consideration which must form the basis of the further analysis secured by the provisos shall come into operation straight away. I do not propose that the amount of the excess profits due to armament contracts shall be fixed any more than is done by

the Clause. All I propose is that it shall be ascertained by reference to the proportions which I propose in the Amendment.
Therefore, I suggest for your consideration. Sir, that all my Amendment does is to cut through the procedure of the Bill, which first of all fixes an entirely inadequate and inappropriate method of ascertainment, and then proceeds to say that if either party thinks that is inappropriate, it can discover the true relationship by another process. I propose that that process shall be taken from the beginning, while not leaving out the two provisos which, if any injustice still remained, could still set it right. For these reasons, I submit that my Amendment would not increase the charge, and consequently, that it is not out of order.

Mr. Speaker: In considering the Amendment I thought at first that it would not make any difference one way or the other, but, after fully considering it, I arrived at the conclusion that, at any rate, it would put those who would become liable to the duty in a more onerous position than they would have been under the Bill as it left the Committee, and that, if the Amendment had any effect at all, it might have the effect of increasing the charge upon those liable to the duty. In considering the matter of charge, it is my duty to consider not only whether an Amendment would increase the charge, but whether it might increase it. That is the reason I intimated that the Amendment was out of order.

Mr. Pethick-Lawrence: May I put one more point to you? I suggest that, far from putting these people to more trouble, it would put them to less trouble, because under the Bill as it is, first of all a decision is made in one way and subsequently it can be upset either by themselves or, alternatively, by the Commissioners, by reference to the very facts which are omitted in the first instance under the Bill and which, under the Amendment, would be taken into account.

Mr. Speaker: I still think that the Amendment would place those persons in a more onerous position than they would be under the Bill as it left the Committee, and that the effect might be to make a charge.

CLAUSE 21—(Meaning of "armament business" and "armament contract".)

4-20 p.m.

Sir Herbert Williams: I beg to move, in page 23, line 32, at the end, to insert:
Provided further that if any person proves to the satisfaction of the Commissioners that his turnover for any year does not exceed £200,000 in respect of armament contracts, then notwithstanding that his receipts for that year in respect of such contracts may exceed such sum, he shall not be deemed to be an armaments manufacturer for the purpose of this part of this Act.
I think the purpose of this Amendment will be clear to the House. Under this Clause, the preliminary procedure is to decide whether or not a firm is liable to this tax, because the Minister, who is in the best position to know what the receipts of the firm have been, first of all declares to the Commissioners that in a particular accounting period, the total receipts for business under armament contracts is not less than £200,000. As an initial procedure, that has a great deal to be said for it, because that is a first fact that is easily known to the Minister. But let us consider what follows. Suppose that there was a case of a firm which in one year did a good deal of work, and that as a result of some delays, arising possibly out of discussions with regard to the accounts, the payments for that work all came in the following year, and that in the second year a certain ammount of work was done the payments for all of which were made during that year. The result would be that a firm which was by intention outside the scope of the tax—what we are really after is the people whose effective turnover in respect of armament contracts is £200,000 a year—and the turnover of which, in respect of armament contracts, was not much more than half the amount would, in fact, be brought under the tax by the sheer chance of the dates on which the cheques were paid.
It might even be that in the case of firms whose accounting period ended on 31st March, the mere fact that the warrant from the Paymaster-General was despatched on 1st April instead of 31st March might decide the question whether they were to bear the tax or not. It seems to me that that is rather stupid. I cannot believe it is the intention that

the tax should depend upon such a fortuitous circumstance as the date on which a certain account is made up. The intention is to bring in people who have contracts beyond a certain magnitude, and this provision might by chance bring in other people. On the other hand, there ought really to be a further Amendment—I know that I cannot move it, because it might increase the charge, and that it could be done by the Government only if the Bill were recommitted—to provide that a firm which had done £200,000 worth of business on armaments in a year should not escape by the mere chance that the payments were not spread over a single accounting period. As the Bill stands, I think it is really unsatisfactory. I hope I have made my point clear.

Captain Strickland: I beg to second the Amendment.

4.24 p.m.

The Chancellor of the Exchequer (Sir John Simon): My hon. Friend the Member for South Croydon (Sir H. Williams) has explained briefly and at the same time clearly the point of the Amendment, and I think everybody will have followed the argument he has put; but there is this to be said on the other side. Under this provision, we are simply selecting the people who will come within the list of those who will be taxable, and we want to have a simple test which can be applied without doubt or challenge, because it will depend on facts which are within the knowledge of the Crown. That is the reason we select the test of receipts, for the spending Departments know what is the amount which, in a given year, they have paid to a particular firm or company. It is within their own records. It is not a matter, apart from accidents, which could ever be subject to any controversy. Therefore, it is a very good test for the purposes of selection and for the purposes of rapidity of administration.
If I recollect rightly, my hon. Friend did put down an Amendment, on the Committee stage, to substitute turnover instead of receipts as the test, but obviously he could not move such an Amendment because it might have had the effect of increasing the charge and bringing in people who would not satisfy the test of turnover, but would satisfy the test of receipts. My hon. Friend, who is always ingenious and persuasive, now


proposes that both tests should have to be satisfied. That proposal no doubt is in order, for if it had any effect at all, it would exclude from the possibility of taxation some people who otherwise would be liable. Nothing can be said on the point of Order, for the effect of the Amendment would be to let out some people who, under the Bill as it stands, would be included. While I agree there is nothing very scientific in saying that the test shall be £200,000 receipts in a year, wherever one draws the line, one is bound to have border cases on the merits of which one can argue a good deal, but I hope the House will take the view that, for the sake of simplicity, certainty and rapidity of administration, the test we have proposed is the right one and should not be complicated by a further provision that, even though this simple test was satisfied and there were receipts of more than £200,000 in a year from the Crown, nevertheless the individual should be outside the risk of taxation because he could show that his turnover in that year was not quite so much. I agree that the two things are not quite the same. I think there would be a tendency for them to correct themselves as between one year and another, but I hope the House will take the view that for practical purposes we have established a very reasonable test, and for those reasons, I am very unwilling to see it changed.

Captain Strickland: Has my right hon. Friend given consideration to the case of two firms which do exactly the same amount of Govrenment contract work within a three-year period? The first firm does £150,000 in one year, £100,000 in the second year and £100,000 in the following year, and gets paid for the first two years in the second year, which brings the amount up to £250,000 receipts, so that the firm has to pay tax on the profits on £50,000. The second firm does exactly the same amount for three years, but gets paid each year, and escapes the tax. May I ask my right hon. Friend whether there is not any possibility, in his administrative capacity, of his adjusting what must obviously be an extraordinarily unfair comparison between those two firms?

Sir J. Simon: I appreciate the contrast made by my hon. and gallant Friend the Member for Coventry (Captain Strick-

land). I do not say it is not a fair illustration to give, but after all, the test of £200,000 is not the same thing as imposing the tax; it is merely a preliminary test for making a list of those whose cases are to be considered. I think the thing will correct itself in the second year as against the first. At any rate, I should be extremely sorry to see this complication introduced here, for it would inevitably introduce what might be lengthy arguments as to the proper calculation of turnover, which is not necessarily a very simple thing, instead of applying, as we seek to apply, a test which, as far as possible, would be automatic.

4.30 p.m.

Sir Frank Sanderson: Could not this whole thing be clarified if, instead of taking the amount of the payments received during any one year, you were to take the value of the goods delivered and invoiced during the year? The intention of my right hon. Friend is to levy a tax upon the total amount of goods delivered during a given period, say one year. If that is to be taken on the basis of payments received, this point arises. The Government might receive deliveries of goods valued at £50,000 in one year, and a further delivery valued at £50,000 the following year, but payment for the two deliveries might be made at one time, that is to say it is possible for payment of the whole £100,000 to fall within one financial year.

4.31 p.m.

Mr. John Wilmot: May I ask whether it would be in order to ask the right hon. Gentleman a question at this stage about an undertaking which I understood him to give during the Committee stage in respect of this Clause? The matter is slightly outside the terms of the Amendment. The question is whether he has considered including in the sums to be taken into account in arriving at the figure of £200,000, orders placed by local authorities and not by His Majesty's Government.

4.32 p.m.

Sir J. Simon: I can speak again only by leave of the House, and, indeed, I think I have already transgressed once in that respect. The point put by the hon. Member for Kennington (Mr. Wilmot) is, I venture to think, one which does not arise on this present discussion. There


was a reference during the Committee stage to the difficulty of introducing local government contracts and my right hon. Friend the Minister-designate of Supply dealt with the point elaborately. In reply to my hon. Friend the Member for Ealing (Sir F. Sanderson) I would say that his point is really the same point as that made by my hon. Friend the Member for South Croydon (Sir H. Williams). He is, in fact, urging that we should substitute turn-over for receipts, or at any rate that we should relate the test to turn-over instead of relating it to receipts. I think it is plain that that would be a very much more complicated test to apply. There is great force in the argument that we should, if we can, make the preliminary list rapidly and simply. I hope it will turn out—indeed I think it will turn out—that the scheme proposed in the Bill will work with substantial justice. I agree that there will probably be a certain number of border-line cases, but I am going to see how it works out and if indeed it is found that cases arise which give occasion for saying that this method is working inequitably and improperly, then, of course, the matter will have to be reconsidered.

4.34 p.m.

Sir Arnold Gridley: May I put to the Chancellor of the Exchequer one aspect of this problem which may not have occurred to him or to his advisers? Those of us who are familiar with engineering contracts which extend over considerable periods, know that it is common for a firm to receive a payment of so much per cent, of the contract price on the delivery of the plant or equipment, and a further proportion when the plant has been erected and has started to work. Thus, a considerable percentage, say 10 per cent, to 15 per cent., may be left over for 12 months, and accordingly the receipts for the goods may not all come into the same year. That is one reason why those of us who are familiar with this business thought it would be fairer to the Exchequer and quite fair to the manufacturer, if turn-over were accepted as the basis of this taxation rather than receipts. When all is said and done, those of us who have to produce our balance sheets at the end of each year, ought to be able to compute accurately what reserves we required to make for Income Tax, for National Defence Contribution

and for this new tax. It will not be so simple for us to do that, if we are uncertain whether we are going to be caught by this tax in a particular year or not. If the turn-over exceeds £200,000, which can easily be ascertained, then we shall know that we are liable to the tax. Therefore, I suggest that this Amendment ought to receive more careful consideration than it appears to have received up to now.

Sir H. Williams: Having regard to the undertaking of the Chancellor of the Exchequer that he will consider any problem that arises in the course of the next year, and also having regard to the fact that the matter can be effectively dealt with in next year's Finance Bill, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

CLAUSE 22—(Computation of standard profits.)

4.37 p.m.

Sir H. Williams: I beg to move, in page 24, line 12, to leave out from "thirty-six," to the end of the Subsection, and to insert "or the year nineteen hundred and thirty-seven."
This Amendment and certain Amendments which follow it on the Order Paper form one group, and I shall endeavour to explain their purpose as briefly as possible. The basis of computation in the Bill is that the firm or the person to be subjected to taxation can select as their standard year, their year of account which ends in either 1935 or 1936; or they can take the average of 1935 and 1937, or they can take the average of 1936 and 1937. The one thing they are not permitted to do is to take the year 1937. I think it is fairly obvious why the Chancellor of the Exchequer has left out 1937. Naturally it is not calendar years that we are considering. This has reference to a year which will vary from firm to firm, because it is the year of account which ends some time during 1937—it may end on 31st January in the case of one firm and on 31st December in the case of another.
The year 1937, as a whole, was a year of rather good trade and in the case of most firms it was a year of reasonably profitable trade. It was not, incidentally, a year in which armament contracts were very important. They cannot have been


to judge by what we had not got in September last, which was a substantial period after 1937. Armament contracts cannot have been an important contributory factor to the general level of profits in 1937. As I say, that was a year of good though not of overwhelmingly good trade. It was, at any rate, a year of substantially better trade than we have known for some time past. The Chancellor of the Exchequer, primarily because it would diminish his revenue if they did so, has decided that these people shall not compute their profits for this purpose in relation to this year of fairly good trade. The Chancellor's point is that he wants to get as much as he can out of this tax. The primary object of all Chancellors is to get as much as they can. That is what they are there for and the more successfully they perform that task, the more we admire them. On the other hand, I am satisfied that in particular cases the exclusion of this year 1937—which, to many firms, was a good year in ordinary, normal trading, having nothing to do with armaments—will involve a certain measure of injustice. I find it a little difficult to understand on what ground of principle, apart from the ground of endeavouring to get as much as possible out of the tax, the Chancellor has introduced the rather novel idea of offering these alternatives in this form, and the Amendment proposes to include the year 1937.

Captain Strickland: I beg to second the Amendment.

4.41 p.m.

Mr. Noel-Baker: This Amendment would change the standard year by reference to which excess profits may be calculated for the purposes of this duty. As far as the Amendment goes, taken by' itself, I, personally, am opposed to it. I am much less inclined, however, to oppose the arguments by which the hon. Member for Duddeston (Mr. Simmonds) supported a similar proposition in Committee. He then pointed out that a great part of the yield of this duty will be paid, not by what are normally known as armament firms, but by firms which were not doing armament work at all during these three standard years. I think the hon. Member touched on a point of great importance. Broadly speaking, during the years 1935, 1936 and 1937 there was no industrial mobilisation. There was no

organisation of the ordinary engineering and other firms of the country for armament production. They were engaged in making their normal peace-time goods, and it was those firms which are normally known as armament firms, which were producing the vast majority of the country's defence requirements.
I think I can show that the Chancellor's proposals, as they stand, may work unfairly as between armament firms proper and other firms which are now engaged in making arms. Indeed, I think I can show that it would be wrong and unjust, and certainly undesirable from the public point of view, to have one standard only. Everybody recognises that the great majority of firms concerned will choose the last of the Chancellor's four offers, namely, the average of the years 1936 and 1937. I think even the hon. Member who moved the Amendment would agree that even for ordinary firms that is not unjust. That average is not far below the peak of prosperity which ordinary engineering firms have been able to achieve in recent years. But for armament firms that average is a great deal more than just; it is extremely favourable. It covers a period during which their orders from the home Government and from foreign Governments, their production and their profits, had all been tremendously expanded when they already stood at a very high level indeed. I ventured to recall to the Chancellor in Committee—and as it is germane to my point, I am afraid I must weary him with a repetition of it—that in 1934 Government expenditure on defence was £113,000,000, and that the average expenditure of the two years 1936 and 1937 was £230,000,000, or more than double that of 1934.

Sir H. Williams: Does the hon. Gentleman mean the year which ended on 31st March, 1938?

Mr. Noel-Baker: Yes. Of course it overlaps a little, but it includes nine months of 1937. Not only had the expenditure on armaments and munitions doubled; it had more than doubled because we had not reached the stage of expanding our man power very much. In point of fact, if we examine the figures we find that, by 1937, expenditure on armaments and munitions was about four times what it had been in 1934. That is not the end of


the story. The share of the private firms had also greatly increased, proportionately to that of the Royal Dockyards and arsenals. I think it is true to say that, by 1937, orders to private armament firms were approximately six times what they had been in 1934, which was the last year of the normal period as far as armaments are concerned. The greater part of that additional business had gone to the ordinary Admiralty, War Office and Air Ministry contractors. No doubt they put out some component parts to subcontractors, but, broadly speaking, up to that time their sub-contracts were nothing very great.
That means that the firms which are normally known as armament firms were by 1937 at a high peak of prosperity; their profits and their dividends show that that was the case. I cited in Committee 30 firms engaged in armaments work whose total of profits had risen from £3,800,000 in 1934 to £11,750,000 in 1937, that is, had increased by three times, or rather more. There had been an increase of £8,000,000 of profit on the same capital—because there had been very little increase, if any, of real capital—and they were making quite good normal profits on their capital in 1934. That total excluded the aircraft firms, and I was able to show that those firms had also had a great increase in orders and profits by 1937, and that, in fact, they were paying dividends of 20, 30 or 40 per cent.
Before the end of the Committee I proposed to the Chancellor that he should consider whether it would be possible to take a different standard year for armament firms proper and that 1934 would perhaps be the right year. If he would take 1935 I should be content and I think it would be an improvement, though I venture to think that 1934 is the right year. With his usual courtesy the Chancellor promised that he would consider the question, and he left me with some hope that he might say something about it on the Report stage, and that is why I am raising it now, but he was very far from promising to make a change. Indeed, he did advance certain reasons against the acceptance of the year 1934 as a general standard for all firms, and some of those reasons applied also against the acceptance of 1934 as the standard even for

armament firms. The Chancellor said that the year 1937 was before our great armament expansion began, that it was only the beginning of what he called the quinquennium of our rearmament plan. With great respect that really begs the question. The quinquennium has nothing to do with it. We have to take the point from which rearmament began, and if the orders to private firms had by 1937 increased by six times over what had been the normal for the preceding 12 years I venture to think that, for the purposes of this new tax, that is rearmament expansion, and expansion on a very considerable scale, and if the firms were paying dividends of 20, 30 or 40 per cent, that is profiteering for the present purposes. I am not blaming the firms. The Government allowed them to do it, they must look after their finances, but it was profiteering of which, for the purposes of this tax, he ought to take account.
The Chancellor also said that it was as a result of the expansion of the quinquennium that the costings system, which was our principal guarantee against profiteering, had failed to operate, that it was because of the immense increase of output due to the development of the five-year plan that the principal guarantee had not operated as it was hoped that it would operate in preventing excess profits. To that there is a double answer. First, there is the answer that before 1937 the costings system was less efficacious than it is to-day. The second answer is that, even by what he himself contends, the sixfold increase in orders must have broken down the efficacy of that principal guarantee against profiteering, and I think that is the reason why profits and dividends had risen to such a high point by 1937.
I think that the Chancellor's reasons for rejecting the year 1934 as a standard for armament firms proper are not conclusive. I trust that he will agree that there is a case for establishing a different basis for armament firms, and that perhaps 1934, or at the latest 1935, would be right. I hope he will not reply that there would be a difficulty in determining which firms ought to be made subject to this standard year. I do not think there would be any difficulty about it. I suggested in Committee that he might take the contractors who were on the Admiralty, the War Office and the Air


Ministry lists as armament firms, but perhaps an even simpler plan would be to include all firms who in the standard year, 1934 or 1935, received £200,000 worth of armament orders. I think that would work extremely well and without injustice to anyone concerned.
I would press this on the Chancellor, because if he refuses some change of this kind I think he will be creating a system which the country will regard as a sham. It has been calculated by an expert in a Conservative paper that under this system Vickers would last year have paid only £70,000 Excess Profits Duty, in spite of the tens of millions of pounds worth of armament orders they must have had, and surely that is a result which would bring the whole system of this new taxation into well-merited derision. When the Prime Minister proposed it he said that it was to meet the views of the Labour party. Our views are that the profit should be taken out of war and the preparations for war, and that we should not now, in this time of crisis, allow an increase in the power or the wealth of a vested interest which draws great profits from the armaments which the nation now needs. The tax as it now stands will do remarkably little to meet any of these purposes, and therefore remarkably little to fulfil the Prime Minister's statement.
I hope the Chancellor will remember that in the Peace Ballot 94 per cent, of those who voted desired that the private manufacture of armaments should be abolished altogether and they would certainly desire that profiteering should be really got rid of; yet I venture to doubt whether there has ever been greater profiteering out of armament manufacture except in the early days of the last War, than there is to-day. I hope the Chancellor will not complete his armament record which at Geneva was not, in the view of some people, a very happy one, by maintaining a scheme which in reality would be a sham. The proposals are lamentably inadequate.

Sir H. Williams: On a point of Order. May I ask whether we are having a Second Reading Debate or a discussion upon my Amendment?

Mr. Speaker: The hon. Member has been getting a long way from the terms of the Amendment.

Mr. Noel-Baker: I am sorry to be out of order. I was really trying to elicit from the Chancellor a statement on something which he said that he would consider in Committee, and as there was a certain argument which he used in his final statement I thought I might be allowed to put the answer to that argument. But I have finished. I would end by begging the Chancellor to say that he will not accept the Amendment.

4.54 p.m.

Sir J. Simon: If I were to address myself to the Amendment which is now before the House I doubt whether I should be able to deal with the matters raised by the hon. Member for Derby (Mr. Noel-Baker), but as he has mentioned them I will trespass so far outside the rules of Order as to assure him that I did consider the suggestion which he made in the Committee stage that I should draw a distinction between armament firms and non-armament firms, and that firms should have a different standard year according to whether they were in the one class or the other. On reflection, I do not think it is a good suggestion. For one thing, I do not think it is true to regard all those who are now making armaments as falling into two simple categories, those who are armament firms and those who are not armament firms, because there are infinite gradations between the two. There are firms who did some armament work in addition to their principal work, others who did next to nothing, and others who did none at all. In the circumstances I think there is no doubt that the course we have taken in the Bill is the right one, and that is to have some common formula for the standard year, to give an adequate number of well selected alternatives, and to provide that in certain cases where this may cause manifest hardship there should be a reference to the Board of Referees.
The hon. Member for Derby was not concerned very much with discussing the Amendment, but with discussing other things, but as regards the Amendment itself, that, too, I have considered since the Committee stage. Another hon. Friend of mine made this proposal during the Committee stage, and I then opposed it but undertook to look into it further, and that I have done. I certainly do not think that the year 1937


standing by itself should be regarded as a normal year for armament purposes. The hon. Member for Derby, who has the figures very much at his finger ends, pointed out how the totals have risen, and I do not think that we could regard that year by itself as what we might call a normal year. On the other hand, as I have pointed out, we are trying in this Bill by simplification to produce a plan for fixing a standard which does not introduce—at any rate does not introduce in the case of old companies—a reference to interest on capital. I am sure that is a wise decision, because whatever rate of interest you allow on that capital it cannot be more than a very rough approximation. We have to use this method as regards new businesses or the increases of capital in old businesses, but if in the case of established businesses we have not to make this calculation of capital and a percentage on it it is a much better plan.
Therefore, we have provided no less than four alternatives. I do not think I can accept the suggestion of the hon. Member for Derby that in every case people will choose one of them, the one which he referred to as the most favourable one. In many cases that may be so, but not in all cases. We have offered the alternative of the year 1935, or the year 1936, or the alternative of either of two averages, the averages of 1935 and 1937 or of 1936 and 1937. My hon. Friend the Member for South Croydon (Sir H. Williams) has done something which is very rare with him: he has made a mistake in the reading of the Bill. He said that for this purpose you might imagine that the year ended at any month, but for the purpose of fixing the standard it is the calendar years which are referred to. You have to take the accounts of a business—if they do not make up their accounts to 31st December—and divide them in such a way as will produce the figure for the calendar year. That, however, is a small point.
I think the four alternatives we have offered will turn out to be about fair. It is true that there was a very considerable increase in the amount which the State spent on armaments in the latter of these years. In the fiscal year 1936–37 the amount was £186,000,000, and in the next fiscal year, 1937–38, it had risen to

£262,000,000; and as we all know, and I have more reason to know it than anybody else, the amounts have risen since then in the most fearful way. There is no question, therefore, that 1937 is the year in which we began to feel the effect of the armaments drive, but it is equally true to say that it does not reflect the full effects of it. I take the view that it is when you get to production on a very large scale that you find yourself at the greatest risk of there being excessive profits which call for taxation. I think, therefore, that the proposals that we make are right.
In arguing here for the provisions of the Bill, I am between the devil and the deep sea—I do not attempt to allocate the parts—in one quarter I am asked to go further in one direction, and in another quarter I am asked to go not so far. I have taken the middle of the road. It is the safest place, and that is where I propose to remain.

Amendment negatived.

CLAUSE 23.—(Provisions as to computation of profits and capital)

Sir J. Simon: I beg to move, in page 26, line 12, after "the," to insert "standard period or."
I am sorry to have to confess that there is a slip in the drafting of the Bill which has only just been observed. It illustrates one of the very commonest forms of error in ancient manuscripts and indeed in modern copying, when the copyist is copying a text in which the same phrase occurs twice and, when he reproduces it, he imagines that he has already got to the second occasion when in fact he has only got to the first, and the result is that he leaves out the necessary words that ought to be repeated. Sub-section (2) says:
Where a standard period or chargeable accounting period is not a period for which the accounts of a business have been made up.
You are dealing with two altenatives, one the standard period, and the other the chargeable accounting period. The Sub-section goes on:
and such aggregation of any such profits or losses or any apportioned part thereof shall be made, as appears necessary, to arrive at the profits arising in the.
Then it ought to be "standard period or chargeable accounting period," but


only "chargeable accounting period" has been printed, and "standard period or" is left out.

Mr. Pethick-Lawrence: I am still very vague as to the effect of putting the words in.

Sir J. Simon: If you have a standard period, the calendar year, 1936, then, in the case of a company which does not make up its accounts to 31st December, 1936, you will have to build your standard period up by taking the appropriate parts of two different accounts. In the same way, if you want to arrive at a chargeable accounting period and it is not the period to which the accounts are made up, the same thing would arise. This is a provision that, supposing that were so, such division and apportionment to specific periods of the profits and losses, and such aggregation of any such profits and losses, shall be made as appears necessary both for arriving at the standard period and for the purpose of arriving at the profits in the chargeable account. It is merely saying that if you have not the figure as a single figure—as a whole—and have to build it up, you shall build it up by taking the appropriate sections both before and after and putting the two together, and thus compose your single period.

Amendment agreed to.

CLAUSE 24.—(Succession and amalgamation.)

5.6 p.m.

Mr. Spens: I beg to move, in page 26, line 23, after "that," to insert:
(a) where the change consists of the death or retirement of a partner, or the taking in of a partner, the persons carrying on the business after the change may, by notice in writing to the Commissioners, elect that the business shall not be deemed to have been discontinued and that a new business shall not be deemed to have commenced; and.
The following Amendment deals with the same point. One refers to partnership, and the other to companies and corporations. My hon. Friend the Member for Eastbourne (Mr. C. S. Taylor) raised this point on the Second Reading, and pointed out that, as the Bill was drafted, it might be possible for present owners of certain businesses which have been in existence for a very long time to find themselves under a very great hardship compared with their competitors in cases where there had been an alteration in the

ownership since 1st July, 1936, because any alteration in ownership made the business a new business, and, therefore, the basic profit standard would be arrived at on the percentage of profit on the average capital employed in the business and not on the actual result of past working in the material years which would be applicable had the business continued throughout in the same ownership. I apprehend that, as the right hon. Gentleman has said that the percentage on a capital basis is a rough-and-ready rule, and it is made applicable to new businesses in any event, it is not intended to be too kind to those businesses which have been started up since 1st July, 1936. But, be that as it may as regards new businesses, it is clear that there are certain businesses which have been going on for a very long time and have changed ownership since July, 1936, and which, in fact, employ a comparatively small amount of working capital and whose profit results in the past are substantially higher than would be a percentage based on their working capital in this or any future year. Therefore, you get this position, that you might have a business which has been in existence for 40 or 50 years whose basic profit standard, if assessed and calculated on the basis that it remains in one ownership, might work out at £50,000 or £60,000, according to the option which the owners took, but which, if it is to be treated as a new business on a percentage standard, might find itself with a basis of something substantially less.
The fact that one company, because there happened to have been a transfer of ownership since July, 1936, would be liable to pay a much greater sum in taxation than a competitor must inevitably handicap it severely against that competitor. Therefore, it is for my right hon. Friend and the House to consider whether or not a mere transfer of ownership should have such possibly very hard results on a particular firm. There is no good reason why, if the transfer is only a technical change of ownership, that result should follow. In the old Excess Profit Duty legislation of 1915 it was recognised that you might have changes of ownership which were really only technical from the point of view of the tax such as the introduction of a partner, or the transference of the business from a private to a public company, or from one


person to another, the earning capacity and the direction of the business remaining wholly undisturbed. In that legislation certain provisions were put in to deal with this, and it is on those provisions that these two Amendments have been based. The first merely provides that, where the change only consists of the death or retirement of a partner, or the taking in of a new partner, the business shall be treated as if it had gone on without any disturbance. The second deals with a case where the change of ownership has been an actual transference in law from one person to another, or one company to another, and where the business, or the main part of the business, has been so transferred and goes on undisturbed it is suggested that the present owners may make application to the Commissioners to have themselves treated as if the business had remained in one ownership throughout and the Commissioners are given power to agree to that either in toto or on terms, or to refuse it. A right of appeal is given to the taxpayer against a refusal, or against the imposition of some term or modification that he regards as unfair.

Mr. Boulton: I beg to second the Amendment.

.5.14 P.m.

Sir J. Simon: I think there is a good deal to be said for these Amendments. I do not think the first is likely to have any very considerable operation in practice. Enterprises that have been paid £200,000 a year for armament contracts would not usually be found to be partnerships. It seems to me that if there were such cases, it is manifestly good sense that you should not say that the business of the partnership, carried on perhaps for many years and carried on after the death or retirement of one of the partners, ought to be regarded as a new business. It is an almost accidental circumstance that the members of the partnership have changed. If the business is being carried on as before, it seems very gratuitous to say that it is a new business, for what may be an accidental cause, such as a change in partnership. If you did so, you would increase the number of cases in which you would have to rely on a valuation of capital, when you need do nothing of the kind, if the business is one which is carried on notwithstanding that a partner

has dropped out or been changed. I do not regard that as an important point, because I do not think it will arise in practice.
The other Amendment is certainly more important, and here again I am anxious that we should consider whether this provision is rightly safeguarded. I would not consent to insert the bald provision that whenever one company sells its undertaking, or part of its undertaking, to another company, the business shall in all cases be treated as a continuing one. That would leave open the door to some cases which we should not be disposed to let out. But undoubtedly there are cases, which can be easily imagined, in which there has been a transfer from one company to another, a reconstruction or something of the kind, where, under suitable safeguards, it appears to me to be wise and right to treat the business as a continuous business, so that you will be able to rely on the standard profit basis. But I would call particular attention to the words of the Amendment at the end of the first paragraph: "Subject, however, to such modifications … as may be just." I think we can trust the Commissioners here, and on appeal the Board of Referees, to see that any necessary adjustment is made, and if the necessary adjustment is made in a case which calls for it, I would ask the House to approve of the principle.
We are seeking to impose Armament Profits Duty on a business. It would never do to say that the business should be looked at without considering who the owners are. That might give the opportunity to owners, after they had made perhaps a great big profit, to dispose of their business to a newly created company and claim that they were newborn, starting at that moment all over again, with results that would not be satisfactory or fair to the Revenue; but in cases where the business was carried on before 1st July, 1936, and it, or the main part of it, was then transferred before 1st April, 1939, to another person, I think it is for the better working of this particular system—and I shall not lose revenue by it—if we say that the Commissioners, if they are satisfied that the business carried on after the transfer is substantially the same as that carried on before, may decide to treat the business as continuous


for the purpose of standard profits, with the precaution "subject to such modifications as may be just." The Commissioners, I am certain, while desiring to do what is fair and right, will at the same time be able to watch the interests of the Revenue in the matter, and if there be a subject of further dispute, the matter can go to the Board of Referees, in whom, I think, we can have the greatest confidence.
But I do not want there to be any misunderstanding on the part of any business now being carried on by a newly created company. It does not at all follow, because it has been transferred from the old to the new company, that in all cases it will be treated as a continuous affair, without modification, but there may be cases in which it is right to do so, and where it is right to do so, I would very much sooner rely on a standard based on the actual experience of the business in profits than have to substitute unnecessarily an alternative standard for the calculation of profits.

5.21 p.m.

Mr. Pethick-Lawrence: With regard to the first Amendment, the one now before the House, I do not think anyone can have any doubt that it is sound. With regard to the second Amendment, I think that in all probability, and with the safeguards that are imposed, it will not work out with unfairness either to the Revenue or to the taxpayer, and, therefore, I see no objection to either Amendment.

Amendment agreed to.

Further Amendment made: In page 27, line 30, at the end, insert:
(4) Notwithstanding anything in the foregoing provisions of this Section, where a business was carried on immediately before the first day of July, nineteen hundred and thirty-six, and that business, or the main part of that business, was transferred after the said day and before the first day of April, nineteen hundred and thirty-nine, by the person carrying it on to another person, the Commissioners, if they are satisfied that the business carried on after the transference was not substantially different from the business or part transferred, may, on the application of the person carrying on. the business after the transference, treat that person, for the purposes of the provisions of this Act relating to the computation of standard profits, as if he had carried on the transferred business or part of a business as from the date of the commencement of that business, subject, however, to such modifications (including modifications as respects the computation of capital) as may be just:

Provided that if the Commissioners refuse an application under this Sub-section or if the applicant is dissatisfied with any modifications made by the Commissioners, the applicant may appeal to the Board of Referees."— [Mr. Spens.]

CLAUSE 25.—(Duty to give information.)

5.22 p.m.

The Minister without Portfolio (Mr. Burgin): I beg to move, in page 28, line 8, after "business," to insert "in the United Kingdom."

This is a drafting Amendment.

Amendment agreed to.

5.23 p.m.

Captain Strickland: I beg to move, in page 29, line 8, at the end, to insert:
(6) Where any person for the purpose of enabling himself to perform an armament contract has entered into another contract with any other persons for the supply by them to him of unidentifiable materials or things, those other persons may demand proof from the first-named person that the things they have supplied under the contract have in fact been used for the purpose of the armament contract aforesaid, and falling such proof being given by the first-mentioned person, a contract to supply those things shall not be deemed to be an armament contract.
The purpose of the Amendment is to make quite sure that a sub-contractor shall be able to get a square deal with regard to armament contracts. It is quite possible that a contractor may be giving out orders to various sub-contractors. In the course of the supply of materials to the contractor, the subcontractor may not be aware whether the goods that he supplies to the main contractor are indeed subject to taxation as part of an armament contract or whether they are materials used for other purposes. It is to enable the sub-contractor to obtain, by legal right, from the contractor some sort of proof that the goods that he has supplied are indeed used for armament purposes that I move the Amendment. It is not an obstructive Amendment at all, but it is to secure that the sub-contratcor may have some legal right to proof of his liability to Armament Profits Duty.

Mr. Hely-Hutchinson: I beg to second the Amendment.

5.25 p.m.

Mr. Burgin: The object of the Amendment, as the Mover has said, is to ensure that sub-contractors are treated fairly,


He did not explain quite who was to be satisfied with the proof, and I think the House would appreciate at once that if the man who was to be satisfied was to be the sub-contractor, it would be a little anomalous, for the House would give to the sub-contractor, himself and alone, the power to say whether or not he came within the tax. I hope my hon. Friends, when I have been able to explain to them a little of the manner in which the tax is to be operated with regard to sub-contractors, will feel that their fears are without foundation and that the Bill contains the proper elements of proof for which they are asking. Let me explain shortly this chain of contracts and sub-contracts, and let me begin by saying that whether or not a sub-contract comes within Armament Profits Duty does not depend on that sub-contractor being satisfied. It is in the last resort a matter for determination by the Minister and is not a matter dependent upon a certificate or somebody's statement. It is an anlysis of facts determined by the Minister after hearing any person who is rendered responsible.
I think everybody in the House realises the enormous part which sub-contracts play in the Defence programme. The main contractor in contract with one of the Defence Services or with the Ministry of Supply proceeds to order from his various suppliers, who in turn procure their material from those further down the scale. The whole chain is a difficult one. That chain must be definitely and absolutely established to bring these sub-contracts within the tax at all, and if that chain breaks down at any particular point, everything below that breakdown should clearly have the benefit of the doubt. That is the way in which the administration of a tax of this kind must be carried out. I would ask my hon. Friends to realise that one of the reasons why in the Clause defining what is an armament contract there was inserted a proviso enabling certain articles and materials to be excluded was precisely this administrative difficulty of tracing the chain of sub-contracts too far down.
Let me take one example of the sort of difficulty of administration with which my Ministry may find itself confronted. It is not unusual for one or other of the large firms of mass production motor car

makers to be engaged also on armament work. There is a whole variety of bolts, screws, nuts, and small, interchangeable parts which are ordered in bulk at the beginning of a season and from time to time replenished, which bolts, nuts, and screws can be used interchangeably, either for the mass production motor car or for the armament contracts which are being carried out. There will come a point at which it is quite impossible to differentiate in the use to which that common bolt is to be put, and, therefore, this tax has to be administered as a sensible, practical matter. You take your main contractor and put him under an obligation to tell his sub-contractor, and you put each subcontractor under an obligation to tell others further down the scale, and it is the Minister who determines whether or not the person and the sub-contract, the articles and materials, come, in the specific case, within the tax.

Mr. Pethick-Lawrence: The Minister says, "We put him under an obligation to tell the sub-contractor." To tell him what? That the bolt is to be used as an armament?

Mr. Burgin: You have to tell him that the supply is ordered for armaments. It is in the Bill, in Clause 25, which deals with this subject. It puts upon him the duty of telling the sub-contractor that the contract in respect of which he has been asked to undertake sub-contracting work is to fulfil an armament contract. It is in Sub-sections (2) and (3). If hon. Members look at Sub-section (2) of the Clause they will see that it says:
It shall be the duty of any person who, for the purpose of enabling himself to perform an armament contract, had, whether before or after the passing of this Act, entered into another contract with any persons … for the supply of anything by them to him … to send to those persons, as soon as may be after the passing of this Act, or, as the case may be, after entering into the contract, a notice in writing stating that the contract has been entered into for that purpose.

Mr. Pethick-Lawrence: I suppose that it covers the case which the right hon. Gentleman gave of the man who had ordered a number of nuts and bolts, part of which he wanted for armaments and part for other work, but I do not see that it is so covered.

Mr. Burgin: We are trying to consider a wide variety of information. The duty


of giving information is absolute. I was dealing with the case of a man who bought the bolts before he had this information. I say that there will inevitably come a point in the contract below which you cannot go further. That was one of the reasons why I thought that coal would probably have to be excluded as well as public utility services, because of the difficulty of dealing with the user to which the fuel was put, as a matter of practical administration. I am endeavouring to tell those who moved the Amendment that it is a canon of taxation that you must have liability determined clearly and not open to doubt, and that if there is doubt the taxpayer ought to be given the benefit of the doubt.
In this tracing of the sub-contracts right down the scale the Minister has the last word in determining whether or not a contract comes within the definition. The words proposed in the Amendment are, therefore, unnecessary. They would be difficult to work. You cannot make liability to taxation depend upon whether somebody does or does not supply proof, and there is no sanction in the Amendment upon someone who has proof, but omits to send it. There are all kinds of difficulties like that. I ask my hon. Friends to accept my assurance that the only way in which you can apply this proposal to a whole chain of sub-contracts is by making sure that the links in that chain are firmly established. That being so, it is not necessary for the subcontractor to have proof submitted to him.

5.34 P.m.

Sir H. Williams: I was not in my place when this Amendment was moved and I thank my hon. Friend very much for moving it. I agree with some of the strictures of the Minister that the drafting is not too good, but I am not clear about the whole position, and I do not think that the Minister has answered the question put to him by the right hon. Gentleman the Member for East Edinburgh (Mr. Pethick-Lawrence) about the mixed bag of nuts and bolts. I, say, as a principal contractor, place an order, which may be for a large sum, of nuts and bolts, or, may be, supplies of steel or copper. Part of that supply is subsequently incorporated in an armament contract and a large part in other

contracts. What is then my duty? I have ordered £10,000 worth of raw material, and so far as I can see about £2,000 worth of it is to be used in connection with the armament contract and the remainder on ordinary civil work. What information do I pass on to the gentleman from whom I bought those things? Do I tell him that they are wanted for an armament contract? If I do, that is an incomplete statement. Somehow or other this matter has to be traced through.
I am dealing with materials which are ordered at the general stores of the factory. Every factory, you will find, has a store with hundreds and sometimes thousands of bins containing a great variety of articles of a standard character which are drawn on in the process of manufacture. Somehow, a system of costing will have to differentiate between the stores which are used for armament contracts and those which are not, and the news will have to be passed down the line. The Minister explained how the machinery relating to armaments contracts would work. I hope that he will answer the question put to him by the right hon. Gentleman opposite.

Mr. Burgin: I can speak again only with the permission of the House. The case put by my hon. Friend the Member for South Croydon (Sir H. Williams)—if I followed it correctly—was that of a purchaser of raw materials who bought without the knowledge of the use to which those raw materials were to be put. That purchase of raw materials is not an armament contract.

Captain Strickland: I do not think that my right hon. Friend understands the point. This is an armaments contractor purchasing from a sub-contractor. The point that we put was that he purchases a quantity of raw material or some product which, as the Minister has said, might be used for one purpose or for another. In fact, a certain proportion of it is ultimately used in armament work and a certain proportion for other purposes. The question which we put is: What is the precise duty of the armament contractor in relation to the subcontractor in reference to this mixed bag of materials?

Mr. Peat: May I be allowed to elaborate this point, in respect to a main con-


tractor who employs a number of subcontractors? He may not get all his bolts or nuts or steel from one subcontractor, but from a number of subcontractors. He may put them all into store. I gather that he is not going to segregate them into different compartments some of which will go to armaments and some to civil work. How can he divide it up between his sub-contractors? It is an almost impossible physical task.

Mr. Burgin: I thought I was coming to that point by my own method. When the armament contractor buys in bulk with the knowledge in his own mind of the part to be applied to armament work, that purchase in bulk is an armament contract. I think that is quite fair. A contractor is under an obligation to give notice of the purchase of the raw material only if he buys it for the purpose of fulfilling an armament contract. Purchase in bulk without reference to an armament contract does not render the vendor of the raw material liable as an armament contractor at all. The man who bought in bulk without reference to the ultimate destination of the goods is not made party to an armament contract at all. That is quite clear from the interpretation of Clause 25 of the Finance Bill. Of course, where one is dealing with such a subject as steel the probability is that the steel will be ordered specifically for the purpose of supplying an armament contract, and to the extent to which the classification of the shapes or types of steel is determined, so the purchaser will have the duty of an armament contractor, that of saying that his purchase is for the purpose of an armament contract.

Mr. Pethick-Lawrence: This seems to me, as Alice said, curiouser and curiouser. It now seems that if a man wants £10,000 worth of articles for an armament contract he has only to add £1,000 worth more, which he is going to use for something else, in order to free the whole £11,000 from being an armament contract.

Sir H. Williams: In view of the discussion which has taken place, I beg to ask leave to withdraw the Amendment. It is quite manifest that we shall require a better solution than the one that has been arrived at.

Amendment, by leave, withdrawn.

CLAUSE 26.—(Application to armament profits duty of Fifth Schedule to Finance Act, 1937, etc.)

5.41 p.m.

The Financial Secretary to the Treasury (Captain Crookshank): I beg to move, in page 29, line 25, to leave out "and," and to insert:
(c) the power of the Commissioners to make regulations with respect to the hearing of appeals under Part II of the said Schedule shall extend to the hearing of appeals and the deciding of any matters by the Board of Referees under this Part of this Act; and.
This is purely a machinery Amendment in order that the Commissioners may have power to make regulations in respect to the hearing of appeals. They are empowered under Sub-section (1) of the Clause to do that for the purpose of appeals before the Special Commissioners, because we have applied the provisions which cover appeals in the case of the National Defence Contribution. Those provisions, however, do not cover appeals to the Board of Referees, and in order that regulation may be made for that purpose this Amendment is moved.

Amendment agreed to.

CLAUSE 28.—(Interpretation, etc.)

5.42 p.m.

Mr. Burgin: I beg to move, in page 30, line 43, at the end, to insert:
(i) the expression 'articles and materials' includes water, gas, electricity and hydraulic power.
I gave an undertaking when the Bill was in Committee that these public utility services would be excluded. As a matter of drafting we exclude them best by operating under the proviso on page 23, line 25. To enable us to do that I have to insert some definition which will bring these strange substances within the words "articles and materials." I do not like to make electricity an article and material. I am not sure that there is yet any accurate definition of electricity. The Amendment enables me to exclude, under the proviso, these services. Immediately the Bill becomes law it is the intention in one of the Orders made under the proviso to exempt these public utility services. I hope that the House will feel able to accept the Amendment.

Amendment agreed to.

CLAUSE 30.—(Estate duty on certain interests arising on death.)

5.44 p.m.

The Solicitor-General (Sir Terence O'Connor): I beg to move, in page 32, line 9, to leave out from "Commissioners" to "that" in line 12.
The purpose of this Amendment is to implement an undertaking which was given during the Committee stage of the Bill. I went into the question then at very great length.—I am afraid at rather undue length.—and I therefore do not propose to repeat now what I then said. The substance of the Amendment that we are making is to provide that if it can be shown that the disposition of the property which is the subject-matter is not made
with reference to, or with a view to enabling or facilitating, the purchase or provision of the annuity or other interest,
the Clause cannot operate. The burden is put upon the persons to prove that they are not associated in any way, and that should be sufficient. That was the opinion which I then gave.

5.45 p.m.

Mr. Benson: I am not prepared to accept this Amendment, because it seems to me that it excludes two very important factors in deciding whether a particular disposition has been made for the purpose of creating an interest arising at death. As the Bill was originally drafted, there were three tests—first, whether the money derived from the deceased person was in the possession of the person who was entitled to it; secondly, whether it was in his resources; and, thirdly, whether the disposition was made for the purpose of facilitating the provision of an interest. Two of these tests have been knocked out; it does not matter now whether the person is entitled to the money or not, or whether it is in his possession or not at the time when the annuity is purchased. All that is left is the question of motive. I assume that the Clause as originally drafted was the work of the gentlemen who look after our direct taxation, and who are very able and experienced persons. They do not draft these tax avoidance Clauses casually and without consideration; I assume that, in drafting such a Clause, they have before them a large number of copies of dispositions and the like, and a large number of instances of tax avoidance. They start with the idea of preventing the specific cases of which they already have evidence, and they

take care to put in just so much as will catch the cases of which they have evidence. We know from experience that, whenever we attempt to stop up a hole in advance, our proposal is invariably rejected by the Government on the ground that they have no evidence that that particular form of evasion is taking place, so I assume that, when we find in a Clause certain specific tests, those tests have been considered necessary as a result of the experience of men who are continuously coming across the forms of avoidance that are dealt with.
I do not think that the Solicitor-General, in his speech in Committee, made out a case for the elimination of these two tests. It is true that he quoted the hypothetical case of a medical student who received from his father an allowance of £200 or £300 a year to carry him through his studies, and who might put aside a certain proportion of that amount to insure his father's life. That strikes me as a very problematical case, and I should be very surprised if the Solicitor-General could dig up an actual instance where it had happened. The Amendment leaves only one test, the test of motive. The question is whether the disposition was made for the purpose of facilitating or helping in the provision of an interest arising at death. Such a thing is extraordinarily difficult to prove, and, when you are trying to prove what was the motive of a dead man, there is little or no evidence that you can call on either side. It is, however, very easy to manufacture evidence as to an ostensible motive. The question of motive has been discussed before. The Finance Bill of 1936 dealt with the transference of assets abroad, and one of the tests there was the motive of the transfer—whether it was or was not mainly the avoidance of tax. The actual phrase is that a man should be free of tax if he could show
to the satisfaction of the Special Commissioners that the transfer and any associated operations were effected mainly for some purpose other than the purpose of avoiding liability to taxation.
That is practically the wording of the present Clause, mutatis mutandis. But what happened? That wording was found to be utterly inadequate, and in 1938 the Chancellor had to strengthen the Clause. He gave the instance of a man who transferred his assets abroad, going through all the various and elaborate methods that


are usual in tax avoidance. He formed an American company; he took care that the income arising from the assets transferred abroad was not remitted to this country; he did everything that the normal tax avoider does. But he went to the Special Commissioners and explained that the real reason why he had gone through all these elaborate and artificial arrangements was, not that he wished to avoid taxation, but that he was afraid the Socialists might at some time come into power, and he did not know what would happen to his money if they did. And the Special Commissioners accepted that fantastic statement and decided that that was his real motive. If the Special Commissioners have to be satisfied, and if they are satisfied as easily and readily as that, it seems to me that the Clause is not worth putting in the Finance Bill.
If a disposition is made for the purpose of financing an insurance policy, all that the disponer has to do is to set out elaborately in the deed his reasons for making the disposition. He can state in black and white that he makes the disposition to his son or daughter in order that they may maintain, in a state that he considers fitting and adequate, such-and-such an estate or house; or he may make a marriage settlement in which he says that he thinks his son ought to have such-and-such a status and that he will provide the money. That is a definite statement which may apparently be quite reasonable. Who is to say, as regards a marriage settlement, what a parent thinks is the right amount to settle on his child on marriage? We are not dealing here with small matters, but with large amounts. He can say that £5,000,

£10,000, £15,000 or £20,000 a year is a reasonable amount to settle on his child on marriage. He may think that £10,000 a year is a reasonable amount for his son to live on, but he may add another £2,000, £3,000, £4,000 or £5,000 for the purpose of providing money with which to purchase an annuity or insurance. How can the Special Commissioner sort that out? The son has only to say his father has embodied in the deed of disposition that he thinks this is the amount he ought to have on marriage. How can it be disproved? This Amendment is going, if I may use the expression, to take the "guts" out of the Clause.

I do not think it is possible for an insurance on the life of some other person to be purchased without that person's knowledge and without his consent, or, where it is being purchased by someone in receipt of funds from the insured person, without his connivance. There might possibly be cases such as were suggested by the Solicitor-General in Committee, but, in the vast majority of cases, where the individual who insures has in his possession funds derived from the person at whose death the interest arises, it is almost invariably the case that those funds have been provided for the purpose, among others, of enabling the insurer to insure the life of the person from whom the funds were derived. Therefore, I sincerely hope we shall vote against this Amendment, which destroys the efficacy of the Clause.

Question put, "That the words proposed to be left out stand part of the Bill."

The House divided: Ayes, 122; Noes, 213.

Division No. 238.]
AYES.
[5.59 p.m.


Adams, D. (Consett)
Cluse, W. S.
Hall, G. H. (Aberdare)


Adams, D. M. (Poplar, S.)
Collindridge, F.
Hall, J. H. (Whitechapel)


Adamson, Jennie L. (Dartford)
Cove, W. G.
Hardie, Agnes


Adamson, W. M.
Cripps, Hen. Sir Stafford
Harvey, T. E. (Eng. Univ's.)


Anderson, F. (Whitehaven)
Daggar, G.
Hayday, A.


Banfield, J. W.
Dalton, H.
Henderson, A. (Kingswinford)


Barnes, A. J.
Davies, S. O. (Merthyr)
Henderson, J. (Ardwick)


Barr, J.
Dobbie, W.
Henderson, T. (Tradeston)


Batey, J.
Dunn, E. (Rother Valley')
Hills, A. (Pontefract)


Beaumont, H. (Batley)
Edwards, Sir C. (Bedwellty)
Hollins, A.


Bellenger, F. J.
Edwards, N. (Caerphilly)
Hopkin, D.


Benn, Rt. Hon. W. W.
Fletcher, Lt.-Comdr. R. T. H.
Jenkins, A. (Pontypool)


Benson, G.
Gallacher, W.
Jenkins, Sir W. (Neath)


Bevan, A.
Gardner, B. W.
John, W.


Broad, F. A.
Gibson, R. (Greenock)
Jones, A. C. (Shipley)


Bromfield, W.
Green, W. H. (Deptford)
Kennedy, Rt. Hon. T.


Brown, C. (Mansfield)
Greenwood, R(. Hon. A.
Kirby, B. V.


Burke, W. A.
Grenfell, D. R.
Kirkwood, D.


Cape, T.
Griffiths, G. A. (Hemsworth)
Lathan, G.


Charleton, H. C.
Griffiths, J. (Llanelly)
Lawson, J. J.




Leach, W.
Oliver, G. H.
Stephen, C.


Lee, F.
Paling, W.
Stewart, W. J. (H'ght n-le-Sp'ng)


Leonard, W.
Parkinson, J. A.
Stokes, R. R.


Leslie, J. R.
Pearson, A.
Strauss, G. R. (Lambeth, N.)


Logan, D. G.
Pethick-Lawrence, Rt. Hon. F. W.
Taylor, R. J. (Morpeth)


Lunn, W.
Price, M. P.
Thorne, W.


Macdonald, G. (Ince)
Pritt, D. N.
Tinker, J. J.


McEntee, V. La T.
Quibell, D. J. K.
Viant, S. P.


McGhee, H. G.
Rathbone, Eleanor (English Univ's.)
Walker, J.


McGovern, J.
Ridley, G.
Watkins, F. C.


MacLaren, A.
Riley, B.
Watson, W. McL.


Maclean, N.
Ritson, J.
Welsh, J. C.


Mainwaring, W. H.
Robinson, W. A. (St. Helens)
Westwood, J.


Marshall, F.
Sanders, W. S.
Whiteley, W. (Blaydon)


Maxton, J.
Sexton, T. M.
Williams, T. (Don Valley)


Messer, F.
Shinwell, E.
Wilmot, John


Milner, Major J.
Silverman, S. S.
Woods, G. S. (Finsbury)


Montague, F.
Simpson, F. B.
Young, Sir R. (Newton)


Morrison, Rt. Hon. H. (Hackney, S.)
Smith, Ben (Rotherhithe)



Morrison, R. C. (Tottenham, N.)
Smith, E. (Stoke)
TELLERS FOB THE AYES.—


Naylor, T. E.
Smith, T. (Normanton)
Mr. Groves and Mr. Mathers.


Noel-Baker, P. J.
Sorensen, R. W.





NOES


Acland-Troyte, Lt.-Col. G. J.
Despencer-Robertson, Major J. A. F.
Mabane, W. (Huddersfield)


Adams, S. V. T. (Leeds, W.)
Dorman Smith, Col. Rt. Hon. Sir R. H.
MacAndrew, Colonel Sir C. G.


Amery, Rt. Hon. L. C. M. S.
Drewe, C.
MacDonald, Rt. Hon. M. (Ross)


Anstruther-Gray, W. J.
Dugdale, Captain T. L.
Macdonald. Capt. P. (Isle of Wight)


Aske, Sir R. W.
Duggan, H. J.
Macmillan, H. (Stockton-on-Tees)


Assheton, R.
Duncan, J. A. L.
Maitland, Sir Adam


Balfour, Capt. H. H. (Isle of Thanet)
Edmondson, Major Sir J.
Makins, Brigadier-General Sir Ernest


Barrie, Sir C. C.
Ellis, Sir G.
Mander, G. le M.


Beamish, Rear-Admiral T. P. H.
Elliston, Capt. G. S.
Margesson, Capt. Rt. Han. H. D. R.


Beauchamp, Sir B. C.
Emrys-Evans, P. V.
Mason, Lt.-Col. Hon. G. K. M.


Beaumont, Hon. R. E. B. (Portsm'h)
Entwistle, Sir C. F.
Maxwell, Hon. S. A.


Bennett, Sir E. N.
Erskine-Hill, A. G.
Meller, Sir R. J. (Mitcham)


Bird, Sir R. B.
Evans, D. O. (Cardigan)
Mellor, Sir J. S. P. (Tamworth)


Boothby, R. J. G.
Fildes, Sir H.
Mills, Sir F. (Leyton, E.)


Boulton, W. W.
Fremantle, Sir F. E.
Mills, Major J. D. (New Forest)


Bower, Comdr. R. T.
Furness, S. N.
Mitcheson, Sir G. G.


Bracken, B.
George, Megan Lloyd (Anglesey)
Moore, Lieut.-Col. Sir T. C. R.


Brass, Sir W.
Gilmour, Lt.-Col. Rt. Hon. Sir J.
Moore-Brabazon, Lt.-Col. J. T. C.


Brisooe, Capt. R. G.
Gower, Sir R. V.
Moreing, A. C.


Broadbridge, Sir G. T.
Graham, Captain A. C. (Wirral)
Morgan, R. H. (Worcester, Stourbridge)


Brocklebank, Sir Edmund
Granville, E. L.
Morris, O. T. (Cardiff, E.)


Brooke, H. (Lewisham, W.)
Grattan-Doyle, Sir N,
Morrison, G. A. (Scottish Univ's.)


Brown, Brig.-Gen. H. C. (Newbury)
Greene, W. P. C. (Worcester)
Munro, P.


Browne, A. C. (Belfast, W.)
Gridley, Sir A. B.
Neven-Spence, Major B. H. H.


Bull, B. B.
Griffith, F. Kingsley (M'ddl'sbro, W.)
Nicholson, G. (Farnham)


Bullock, Capt. M.
Grimston, R. V.
Nicolson, Hon. H. G.


Burgin, Rt. Hon. E. L.
Gritten, W. G. Howard
O'Connor, Sir Terence J.


Butcher, H. W.
Guinness, T. L. E. B.
Orr-Ewing, I. L.


Campbell, Sir E. T.
Gunston, Capt. Sir D. W.
Peake, O.


Cartland, J. R. H.
Hannah, I. C.
Peat, C. U.


Carver, Major W. H.
Hannon, Sir P. J. H.
Perkins, W. R. D.


Cary, R. A.
Harbord, Sir A.
Pickthorn, K. W. M.


Cazalet, Capt. V. A, (Chippenham)
Haslam, Sir J. (Bolton)
Pilkington, R.


Channon, H.
Heilgers, Captain F. F. A.
Ponsenby, Col. C. E.


Chapman, A. (Rutherglen)
Hely-Hutchinson, M. R.
Pownall, Lt.-Col. Sir Assheton


Chapman, Sir S. (Edinburgh, S)
Heneage, Lieut.-Colonel A. P.
Procter, Major H. A.


Chorlton, A. E. L.
Hepburn, P. G. T. Buchan-
Radford, E. A.


Christie. J. A.
Hepworth, J.
Ramsden, Sir E.


Clarke, Colonel R. S. (E. Grinstead)
Higgs, W. F.
Rankin, Sir R.


Clarry, Sir Reginald
Holdsworth, H.
Reed, Sir H. S. (Aylesbury)


Cobb, Captain E. C. (Preston)
Holmes, J. S.
Roberts, W. (Cumberland, N.)


Colfox, Major Sir W. P.
Hudson, Capt. A. U. M. (Hack., N.)
Ropner, Colonel L.


Colman, N. C. D.
Hunloke, H. P.
Rosbotham, Sir T.


Colville, Rt. Hon. John
Hunter, T.
Ross Taylor, W. (Woodbridge)


Conant, Captain R. J. E.
Hurd, Sir P. A.
Royds, Admiral Sir P. M. R.


Cook, Sir T. R. A. M. (Norfolk, N.)
Jarvis, Sir J. J.
Ruggles-Brise, Colonel Sir E. A.


Cooke, J. D. (Hammersmith, S.)
Jones, Sir H. Haydn (Merioneth)
Russell, S. H. M. (Darwen)


Cooper, Rt. Hn. T. M. (E'nburgh, W.)
Jonas, L. (Swansea W.)
Salmon, Sir I.


Courthope, Col. Rt. Hon. Sir G. L.
Kerr, Colonel C. I. (Montrose)
Salt, E. W.


Craven-Ellis, W.
Kerr, H. W. (Oldham)
Samuel, M. R. A.


Croft, Brig-Gen. Sir H. Page
Kerr, Sir John Graham (Sco'sh Univ's.)
Sandeman, Sir N. S.


Crookshank, Capt. Rt. Hon. H. F. C.
Lamb, Sir J. Q.
Sanderson, Sir F. B.


Cross, R. H.
Lambert, Rt. Hon. G.
Schuster, Sir G. E.


Crowder, J. F. E.
Law, R. K. (Hull, S.W.)
Seely, Sir H. M.


Cruddas, Col. B.
Leech, Sir J. W.
Selley, H. R.


Culverwell, C. T.
Lees-Jonas, J,
Shaw, Captain W. T. (Forfar)


Davison, Sir W. H.
Leighton, Major B. E, P.
Shepperson, Sir E. W.


De Chair, S. S.
Levy, T.
Simon, Rt. Hon. Sir J. A.


Denman, Hon. R. D.
Liddall, W. S.
Smith, Sir R. W. (Aberdeen)


Denville, Alfred
Lloyd, G. W.
Smithers, Sir W.







Snadden, W. MCN.
Taylor, Vice-Adm. E. A. (Padd., S.)
Wedderburn, H. J. S.


Somervell, Rt. Hon. Sir Donald
Thomas, J. P. L.
Whiteley, Major J. P. (Buckingham)


Somerville, Sir A. A. (Windsor)
Thomson, Sir J. D. W.
Williams, Sir H. G. (Croydon, S.)


Spears, Brigadier-General E. L.
Thorneycroft, G. E. P.
Willoughby de Eresby, Lord


Spens. W. P.
Titchfield, Marquess of
Wilson, Lt.-Col. Sir A. T. (Hitchin)


Stanley, Rt. Hon. Oliver (W'm'l'd)
Tryon, Major Rt. Hon. G. C.
Winterton, Rt. Hon. Earl


Stewart, J. Henderson (Fife, E.)
Tufnell, Lieut.-Commander R. L.
Wright, Wing-Commander J. A. C.


Strauss, H. G. (Norwich)
Wakefield, W. W.
York, C.


Strickland, Captain W. F.
Wallace, Capt. Rt. Hon. Euan
Young, A. S. L. (Partick)


Stuart, Hon. J. (Moray and Nairn)
Ward, Irene M. B. (Wallsend)



Sueter, Rear-Admiral Sir M. F.
Wardlaw-Milne, Sir J. S.
TELLERS FOR THE NOES.—


Tasker, Sir R. I.
Waterhouse, Captain C.
Lieut.-Colonel Harvie Watt and


Tate, Mavis C.
Webbe, Sir W. Harold
Captain McEwen.


Question, "That the Clause stand part of the Bill," put, and agreed to.

Bill to be read the Third time To-morrow.

Orders of the Day — MILK INDUSTRY (No. 2) BILL.

Considered in Committee.

[Colonel Clifton Brown in the Chair.]

CLAUSE I.—(Payments to producers and boards in respect of quality milk.)

6.7 p.m.

Mr. T. Smith: I beg to move, in page 2, line 37, to leave out "accredited milk, standard milk."
I move this in order to get from the Minister some indication as to what is meant by accredited milk and standard milk. As I understand it, it is a kind of low-grade milk which will qualify for subsidy. Is there any guarantee that it will be clean; and if not, why not?

6.8 p.m.

Mr. Price: I want to put a question as to why accredited milk and standard milk are classified here as "quality milk"? Up till now premiums have been paid, largely out of funds found by the Milk Marketing Board by putting a levy on those who do not qualify. Those who have passed the standard test and have accredited milk of a low bacterial content are paid by those who have not. The passing of this test ought to be general, and I do not see why it is necessary that there should be a grant in this case. It should be possible for the Milk Marketing Board to finance the scheme by itself. We want to assist as far as possible in the improvement of milk and the increase of those who qualify as producers of accredited milk, but I am inclined to think that it would be better if some scheme were evolved for financing those who find it difficult to become accredited milk producers to do so. Tuberculin tested milk is a different thing altogether; and, so far as that is concerned, I am agreed that there should be a Government subsidy.

6.12 p.m.

The Minister of Agriculture (Colonel Sir Reginald Dorman-Smith): The accredited milk producer, in order to get his licence, must satisfy the licensing authority, first, as to the general health of the milch cow, and, secondly, as to his arrangements for producing milk: as to the structure and cleanliness of the building and the cleanliness of the implements. For standard milk there are much the same conditions. The herds of accredited producers are subject also to periodical inspection, and the milk is subject to tests. A high standard is set as far as cleanliness is concerned—the same standard as tuberculin tested milk. With regard to the question raised by the hon. Member for the Forest of Dean (Mr. Price), our desire, and the desire of the Milk Board, is that we should get to a position where nothing below the standard of accredited milk shall be sold or liquid consumption; but we have first to do that by encouragement, by making it possible for those producers to go all out to increase the standard of their milk. There are certain things which producers have to do to get to the accredited standard. The Government think it better to try to get them to improve, and to hasten on the time when we can in fact get the proper milk supply that we all want.

6.14 p.m.

Mr. T. Williams: While the Minister's explanation is very clear and understandable, I am not sure that this Committee is justified in providing an encouragement in this particular form. What the Minister says is that periodical inspection takes place on certain farms. The inspector must be satisfied as to the general health of the dairy herd—as distinct from any tuberculin test—and that the buildings are reasonably good and fairly clean. The health of the herd is fairly good, there has been a tuberculin test, and the buildings are reasonably clean and so on. It


really ought to be incumbent upon the producer of milk to fulfil every one of those conditions without being bribed to do it. We are obliged here and there to encourage people to do what society demands they should do without any encouragement at all, but why we should provide a bribe for a farmer who merely keeps his cattle in a decent state of health and his buildings reasonably clean, I really do not know. He expects a high price for his milk, apart altogether from doing it, and I am not sure that we can justify this form of encouragement. It may be that the general health of the herd is fairly good but it may equally be that every head of cattle within that herd would react to a tuberculin test. If all the herd reacted to the tuberculin test, the premium would be paid. Is that not so?

Sir R. Dorman-Smith: Samples are taken.

Mr. Williams: Samples are taken, but what tests are applied for this particular category? In the table to the Schedule in page 15 of the Bill these words are recorded in respect of the milk for which the particular premium is paid:
Accredited or Standard Milk which is not Tuberculin Tested or Certified Milk and is not milk from an attested herd.
There the attested herd is something different from the accredited herd, and the accredited herd may react to the tuberculin test and get a premium. There is no guarantee that this really is pure, clean milk. I do not want to reduce the standard or quality of milk. Cleanliness of buildings apparently is a condition for the receiving of this premium. Hon. Members must know that there are thousands of farms in this country where the buildings are hopelessly out of date and wholly inefficient, and no inspector would pass them as being clean within the meaning of the statement made by the Minister a short time ago. I went to a farm in my division last Sunday week in order to look round the farm buildings, and to express an opinion, if I felt so disposed, as to what I thought of the buildings and the whole of the farm. I had not seen for a long time a more disgusting sight than those farm buildings. I went into the farmer's domestic premises and saw both the farmer and his wife. Everything was as

clean as a new pin. Nothing was left to be desired in their home, but the farm buildings were in such a wretched condition that no inspector who did his duty could declare that the milk came within the category of being taken from cows housed in clean buildings.
Even if this Committee were to declare that it is right and proper to encourage farmers to produce clean milk and to keep their buildings as clean as possible, there are tens of thousands of farmers who, through no fault of their own, cannot fulfil these conditions. On the particular farm to which I have referred the landlord will not put the buildings into a decent state of repair. He will not give the tenant farmer written consent to spend a few hundred pounds upon putting the buildings into a decent state, and the producer therefore cannot qualify for this premium. His case can be multiplied by thousands all over the country.
My major point is that when milk passes through a certain test where it can be shown that the farmer has spent money on new buildings, new machinery and equipment, and has gone to the expense of producing a high grade quality of milk, the House of Commons is not only doing the right thing, but is wholly justified in lending encouragement in that direction. I have a letter here from a Welshman who knows something about the production of milk but I am not too sure what exactly lurks behind his mind, and perhaps the Minister will tell me when I quote from his letter. He declares that in certain areas in Wales their herds are absolutely tubercular free—not one of the cattle reacts to a tuberculin test—but because they do not come within one or other of the categories that are in the Schedule they do not qualify for a premium at all. That may seem somewhat astounding to the Minister or it may even be amusing, but there it is. He goes on to say:
You have heard so much about Grade A and T.T. milk. Let me remind you that neither the Grade A producer nor the certified grade producer has reached the standard of a certain ordinary milk producer who has reached the record low amount of 200 bacteria. That being so, why spend money on these grades when the money could be utilised to better advantage in other directions?
I do not quite know the background for this contention. The right hon. and gallant Gentleman's explanation was only


partly satisfactory. In explaining the object of this Schedule to my hon. Friends I think he might have issued a word of warning to milk producers all over the country, and to landowners who have a duty and responsibility to their tenant farmers, that we want quality milk produced all over the country, and that where it reaches a high grade, Parliament is willing to provide a premium, but that where it qualifies only because the buildings are good and modern and up to date and clean, no premium is called for and no premium will be paid. We are encouraging milk production in the wrong direction, and I am not at all satisfied that Parliament is justified in paying a premium for these two particular categories.

6.24 p.m.

Captain Heilgers: I feel that as I happen to be one of the accredited producers myself I should say a few words in reply to the hon. Gentleman the Member for Don Valley (Mr. T. Williams). I would point out to him that it is not only a matter of buildings, but, as the Minister said, of a very rigorous inspection of all the cows four times a year. Any cow that is seriously affected with tuberculosis is bound to be spotted by the inspector. [An HON. MEMBER: "Only seriously affected."] Only the cows that are seriously affected are likely to give tubercular milk. We are not only inspected in that way, but we have a test four times a year and if we fail to pass the test we lose the grant. There is much more than that in it. We have to groom the cows until they shine like a new pin every time before they are milked. The cows have to be perfectly clean in every possible way, and in addition we have to sterilise all the utensils that are used for the milk, which is the most perfect way of killing germs. We are put to all the trouble of keeping extra men to clean the cows, to see that all the utensils are sterilised and to keep the cow-houses and buildings in a perfectly clean condition. It is not a question of our being bribed by the 1¼d. to undertake these precautions but rather it is a question of whether the 1¼d. is sufficient to cover the expense to which we are put. I should say that it is very doubtful whether it is sufficient.
I would remind hon. Gentlemen opposite how we arrived at this stage of

graded milk. I happened to be the chairman of the committee that dealt with the question in my county, so I have had some experience of it. It took years of agricultural education and clean milk competitions and so forth to make people alive to the need for clean milk. It was only when we had the whole county awakened to the need for clean milk that we were able to start the graded milk scheme, and the same applies to other counties as well. The hon. Member for Don Valley told us a story about a certain set of buildings which he said were in a disgusting condition. You will always find that sort of thing; there are always exceptions. There are bad landlords but there are also a great many good landlords.

Mr. MacLaren: No.

Captain Heilgers: Whatever applies in the division which the hon. Member represents does not apply in mine. We have done our best to provide the public with clean milk in the form of graded milk, and if there are landlords who will not put their buildings in order, I can only suggest that, by reason of the fact that we have encouraged the production of graded milk, we shall in time force those bad landlords to improve their buildings, because otherwise they will not be able to let their farms for milk production. I warmly support the proposal for a bonus to producers who are taking an enormous amount of trouble to provide a good, clean, pure milk supply for the public, and I hope that nothing will be done to discourage them.

6.29 p.m.

Mr. Charles Brown: The hon. and gallant Gentleman the Member for Bury St. Edmunds (Captain Heilgers) has clearly demonstrated to the Committee that there has been a large quantity of milk which at any rate is not fit for human consumption. He has pointed out the process which has to be gone through in order to make the milk fit for human consumption. There are still some of us in this Committee who believe that there is a good deal of milk offered for sale which is not fit for human consumption, if you apply certain tests to that milk.

Captain Heilgers: May I remind the hon. Member of the enormous fall there has been in the tuberculosis figures in this country in the course of the last 25 years?

Mr. Brown: That exactly proves my case and merely reinforces the point I am trying to make, that, if this process goes on to a further degree, we may hope greatly to reduce the figures of tuberculosis from what they are to-day.

Captain Heilgers: I am sorry to interrupt the hon. Member again, but he is not quite clear as to what I said. I said that in the last 25 years—the accredited milk has been going only for the last three or four years—there has been an enormous drop in tuberculosis, which means that the milk supply in this country, much of which the hon. Member says is unfit for human consumption, must have improved very much, because it was not accredited up to four years ago.

Mr. Brown: If the hon. and gallant Member cares to put it that way, well and good, but it does not affect the argument that I want to put. My hon. Friend the Member for Normanton (Mr. T. Smith) has just said to me, in a Yorkshire phrase, that the Government are still subsidising mucky milk. I am inclined to agree with him. The expression is a very effective one, but it approximates in some cases to the truth. Sooner or later the Minister of Agriculture will have to lay down certain standards about cow-sheds. What may hon. Friend the Member for Don Valley (Mr. T. Williams) had in mind, and it has been confirmed by the hon. and gallant Member, was that cowsheds in some parts of the country are in a very bad condition, and in dealing with them there seems to be divided authority. I know of one case where the local sanitary inspector for the urban district council went round and examined some cow-sheds and asked that certain things should be done, so that they could be brought up to the required standard; but he was overruled by the county agricultural committee and its official. Therefore, there is divided authority as to what is required and desirable.
If we are to have a really clean milk supply, about which we are all agreed, then the hon. and gallant Member will agree with me when I suggest to the Minister of Agriculture that sooner or later he must lay down very definite standards about cow-sheds, and see that they are enforced, but he will not be able to do that if there is to be divided authority and differences of opinion. I am certain that in many cases there is very

great difference of opinion between the sanitary inspectors of rival authorities, particularly in regard to farm buildings. I should like to hear what the Minister has to say about that.

6.33 p.m.

Colonel Clarke: The hon. and gallant Member for Bury St. Edmunds (Captain Heilgers) raised two or three points to which I should like to add. He was mentioning the extra cost involved to the farmer in producing accredited milk. There is the cost of the sterilising plant.

The Deputy-Chairman: I would remind the hon. and gallant Member that we are not discussing cost.

Colonel Clarke: I was only trying to make the point that the farmer is put to extra cost in producing this accredited milk, and that therefore there is justification in his being rewarded by the extra money he gets for producing the accredited milk. Would that be in order?

The Deputy-Chairman: That would be in order as an illustration.

Colonel Clarke: The farmer has to buy sterilising plant, which may cost £40 or £50. Milkers are scarce to-day and as a result of the extra work put upon the milkers in producing accredited milk they may threaten to leave, and that very often causes the farmer to raise their wages. If he is wise he pays them extra wages anyhow. Again, one-third of our farmers are owner-occupiers. Two hon. Members opposite, one of whom was the hon. Member for the Forest of Dean (Mr. Price) suggested that the landlord or the owner-occupier should have something to recompense him for money spent on buildings. One-third of the fanners being owner-occupiers they do get something.

Mr. Price: I did not quite mean that. I meant that there was a strong case for those who were not able to improve their buildings, and that the tenant should be allowed to have money advanced to him from the Milk Marketing Board, and that that should be a charge before the rent was paid.

Colonel Clarke: I am sorry if I did not quite express the hon. Member's view, but I think in this case they are getting something in respect of the money they have spent. They get the allowance of 1¼d. Lastly, in regard to


the case which the hon. Member for Don Valley (Mr. T. Williams) raised about certain farm buildings. Did he see the lease? Was that farm let as a milk farm, or was it the case that it was originally let as an ordinary farm and the farmer subsequently went into milk and now he wanted a great deal of money to be spent on the farm?

Mr. Williams: The answer to the hon. and gallant Member's question is in the negative.

Colonel Clarke: I would ask further, are they producing accredited milk now?

Mr. Williams: If the farm was producing accredited milk or tubercular attested milk he could not qualify for the premium because the buildings through which the cattle had to go would disqualify him from getting a premium or anything else.

Colonel Clarke: I think the farmer is entitled to get a little more money, considering the expense he is put to. I hope that the Amendment will not be accepted.

Amendment negatived.

6.37 p.m.

Mr. T. Williams: I beg to move, in page 3, line 11, to leave out "or entitled to the benefit."
I move the Amendment with a view to obtaining information. I should like to know whether the licence is granted to the person or to the farm. It is conceivable that I might be the owner of a licence, and I might therefore qualify for any one of these premiums, or I might not have acquired my licence and still might be entitled to a licence and to the benefit of the licence while I am on one particular farm. While I am qualified for the licence or qualified to be entitled to the benefit of the licence I might leave a perfectly clean farm and migrate to a farm such as the one I have described earlier, where no farmer in those circumstances could qualify for any of these three sets of premiums. I want to know whether the licence is to be granted to the person as such or to the farm as such, and whether that licence is transferable if the farmer moves from one farm to another.

6.39 p.m.

Sir R. Dorman-Smith: As I understand the situation, the licence is granted to a

person in connection with a farm, I do not think that you can get any licence unless the conditions with regard to buildings and other things are fulfilled. The licences in question are licences granted, under the Milk (Special Designations) Orders, made under the Milk and Dairies (Amendment) Act, 1922. So far as England is concerned these orders will, as from 1st October, 1939, have effect as if they were regulations made under the Food and Drugs Act, 1938, which repeals the 1922 Act. Section 97 of the Food and Drugs Act provides that:
Where a person who holds a licence under this Act or any regulations there under dies, the licence shall, unless previously revoked or cancelled, enure for the benefit of his widow, or any other member of his family, until the expiration of two months, after his death, or until the expiration of such longer period as the licensing authority may allow.
It is accordingly necessary to cover cases such as those for which Section 97 of the Food and Drugs Act provides, where there is a beneficiary of the licence who is not the holder of it, and it is for this purpose that the words, "or entitled to the benefit," are included.

Mr. Williams: After that explanation, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause ordered to stand part of the Bill.

CLAUSE 2.—(Payments from Exchequer to boards in respect of milk sold at reduced prices.)

6.42 p.m.

Colonel Baldwin-Webb: I beg to move, in page 4, line 28, at the end, to insert:
Provided always that before making any payment to a Milk Marketing Board under this Sub-section the Minister shall satisfy himself that the board has obtained the agreement of such body or bodies as in his opinion are representative of Milk Producer Retailers in Great Britain as to the terms on which the milk shall be distributed.
The object of the Amendment is to draw attention to the fact that producer-retailers who distribute not less than 20 per cent. of the milk produced are not represented on the Milk Marketing Board. I should like a statement from the Minister on that matter. Many of us inside and outside the House, fee) that these people should have representation.

6.43 p.m.

Major Procter: There was standing in my name an Amendment which has not been called, and therefore I take this opportunity of suing on behalf of the milk distributors and the producer-retailers. There is a very grave injustice being done in not making the producer-retailers and the distributors parties to the contract. Under these schemes for supplying cheap milk to public elementary and secondary schools and also to expectant and nursing mothers and children under five years of age, the Minister may, out of moneys provided by Parliament, pay any sum that he thinks fit, not exceeding the amount which in his opinion represents the loss incurred by the board; but there is nothing in the Bill that provides for any loss being made by the producer-retailers and distributors. I do not desire in any way to imperil the supply of cheap milk to school children and to expectant and nursing mothers, because this is one of the outstanding achievements of the Government in doing something practical to establish a. fine state of health in the country.
Surely this great achievement, which is a monument to the National Government, should be paid for by the Government itself instead of by the distributors and the producer-retailers. At the present moment they get 8d. per gallon. It took nearly two years to raise it by a penny from 7d. to 8d. What have they to do for that? They have to provide the bottles, put in half-a-pint of milk, put the tops on the bottles, clean the bottles, make good the wastage and then transport the milk to the various places where it is to be consumed, and they have to meet a loss on every bottle of milk which they distribute. The producer-retailers and distributors are prepared to do their part and to share part of the loss. What I am asking is that the Government instead of only consulting them should bring them in as a party to the agreement, instead of in this high-handed manner compelling them to distribute milk. It should be compulsory for the Board, in regard to this benevolent cheap milk scheme, to obtain their agreement instead of merely consulting them.

6.48 p.m.

Mr. Price: I hope the Minister will not accept the Amendment. The hon. and gallant Member who moved it referred

to grievances of the producer-retailers. He said that they are not sufficiently represented in matters concerning milk production and distribution. The difficulty, of course, is to get an organisation which really represents them. In my own county the branch of the National Farmers' Union have a special committee of producer-retailers and also of wholesale producers, and the two committees work together most amicably. As far as the council is concerned, we have no trouble whatever. I do not think the grievances mentioned by the hon. and gallant Member are serious. Neither do I think the distributors have any serious grievance. I gather that the hon. and gallant Member for Accrington (Major Procter) was arguing that they are suffering from the competition of those schemes which supply milk to schools and to nursing mothers.

Major Procter: All I am asking is that they should be not only consulted but should be made parties to the agreement. Instead of coercing them, they should be made parties to the agreement in the same way as producers.

Mr. Price: I believe that they are consulted already and that they do work amicably in the schemes. After all, they must realise that without these cheap milk schemes they would not get such a large supply of milk, and if they have to take a smaller profit I do not think it will ruin them.

6.51 p.m.

Sir R. Dorman-Smith: I cannot possibly accept the Amendment. I cannot follow the reasoning that the producer-retailer, or indeed any retailer, is suffering hardship because of the present situation. They are not forced to come into the scheme at all; it is quite voluntary on their part. My desire is to get these cheap milk schemes going as quickly as possible, and if we have to enter into agreements and consultations it would be a long time before we could get them into operation. As far as I can see, the Milk Marketing Board represents the producer-retailer. I am well aware of the controversy in regard to the representation on the Milk Marketing Board, but that is another story. I hope that no further obstacles will be placed in the way of getting these cheap milk schemes going, and I hope the Amendment will not be pressed.

6.52 p.m.

Rear-Admiral Beamish: I am not entirely satisfied with what the right hon. Gentleman has said. I am the last person to stand in the way of the promotion of these cheap milk schemes, but I feel it is necessary to support the principle of the Amendment, because it seems to me to be vital to hold the balance between the producer, the distributor and the consumer. I think that the producer is most certainly satisfied, and is represented in a remarkable way on the Milk Marketing Board. I have taken the trouble to look into the question of retailers in general, and from the information I have been able to acquire it seems clear that in the past they have been coerced into accepting a sum which has not covered the expenses of distribution. I think it is deplorable that something approaching the actual price that is paid to the producer has to be expended before you can distribute the milk to the consumer, and I would support anything if I thought it would bring down these costs. Be that as it may, a genuine and perfectly good case is put forward by the distributors that at the present time the Bill does not sufficiently safeguard the interests of the producer-retailer.
On the Second Reading Debate the right hon. Gentleman said that discussions were taking place and that he hoped agreement would be reached. I listened to what the right hon. Gentleman said this afternoon, and I did not get a great deal of comfort out of it. I have a feeling that the distributor may be left out and will be in the same difficulty as he has been hitherto. I agree with the right hon. Gentleman when he said that the results amply justify any expenditure which is necessary to the operation of the scheme. I support that view; at the same time, I would like to enter my protest against leaving out of the Bill safeguards for the distributor. I hope the right hon. Gentleman will do everything he can to safeguard those interests more than the Bill does at the present.

6.55 P.m.

Mr. T. Williams: I am pleased that the Minister has not seen fit to accept the Amendment. First of all, it demands that before any scheme can be applied the Minister must satisfy himself that the board representing the producers has secured the agreement of the distributors,

in other words, the distributors of milk can hold up any scheme in any part of the country. Clearly, no Minister of Agriculture could allow the distributors of a commodity to have the power to hold up any one of these cheap milk schemes. The hon. and gallant Member for Accrington (Major Procter) wants them to have the power to make or break any of the schemes for distributing milk to elementary school children and expectant mothers.

Major Procter: That is not the intention. The intention of the Amendment is that distributors shall not be forced to accept an uneconomic price, and all I ask is that in this great benevolent work the producer-retailer shall not have to pay for it, but that it shall be paid for by the National Government.

Mr. Williams: The hon. and gallant Member must not forget that the Amendment demands that agreement must be obtained from the distributors before any scheme can apply. It is not necessarily an uneconomic service. The hon. and gallant Member who moved the Amendment and the hon. and gallant Member for Accrington have not taken any note of the fact that, largely due to the Milk Marketing Board and Government assistance, liquid milk sales have increased by 100,000,000 gallons. Parliament has helped the distributors to increase their business enormously. The hon. and gallant Member for Accrington has told us of the wonderful service which the distributors perform but he did not tell us that in 1913 the milk distributor was content with 6⅞d. per gallon, and that to-day the milk distributor is getting 11d. It is true they have to put it into bottles, but they are getting nearly double the price. In any case I am certain that the cheap milk scheme for school children which will be largely organised by local authorities, will be regarded by them as a desirable scheme which ought not to be held up by the distributors.

Rear-Admiral Beamish: May I ask whether the hon. Member agrees that a commercial firm whether it is the Cooperative Society or any other firm should distribute milk at an uneconomic rate? I say it is deplorable that it should cost so much; but the facts are obtainable.

Mr. Williams: I do not want any milk distributed at an uneconomic rate. I am


not worried about the milk distributor. I am worried about the milk getting to the women and children who need it. If the ordinary distributors as part of their service are not anxious to join in this good health service, it will not be so great a problem for local authorities to provide the machinery for distribution where the ordinary distributor can remain outside. The right hon. Gentleman is quite right in not accepting the Amendment on the Paper, whatever the intentions of the hon. Gentleman may be.

Colonel Baldwin-Webb: I should just like to say that the last thing which is intended is to impede the scheme which the hon. Member has in mind. We all hope that at some early date agreement may be reached.

7.0 p.m.

Sir Ernest Shepperson: I hope that we shall not have too much sympathy for the distributors. I have had a case brought to my notice where, after paying railway carriage, the man was getting 6d. per gallon and milk was being distributed at 2s. a gallon. Therefore, I hope we shall not have too much sympathy for the distributors, because they can look after themselves.

Amendment negatived.

Motion made, and Question proposed, "That the Clause stand part of the Bill."

7.1 p.m.

Mr. T. Williams: Before this Clause passes I should like the right hon. Gentleman to provide some enlightenment as to when these schemes are likely to be put forward. So far, all we have had from the right hon. Gentleman is a statement that they are hoping that a scheme will start very shortly. What kind of a scheme is it likely to be? Will it apply to the whole country or is it a scheme that is to be recommended to every local authority in the country? Is it to be a standardised scheme or will it vary in different parts of England and Wales? So far, information has not been forthcoming. In view of the delay in England and Wales, largely due, I am afraid, to those distributors who have not been helpful in producing these schemes, we have no scheme in England, although for three months similar schemes have been in operation in Scotland. Can the right hon. Gentleman give us any idea when a scheme or a number of schemes are likely

to start in this country, and can he outline what kind of scheme he has in mind?

7.4 p.m.

Sir Joseph Lamb: Can the right hon. Gentleman give us any indication when these payments are to be made? What period will elapse? It is not generally realised that the board has had to sustain a very considerable loss owing to delay in the payments they have received. Milk supply up to 31st May amounted to £1,100,000. They had to spend that money the whole of the time, and there has been a considerable loss to the board because they have really been financing the Government in the carrying out of these schemes. There has been an actual loss of nearly £4,000 to the board, and if the money they had expended had been invested at 2½ per cent. it would have realised £8,718.

7.5 p.m.

Mr. Hopkin: Would the Minister be so kind as to tell the Committee where he stands with the board regarding his powers under Section 2 (l, b)? In introducing the Milk Bill the Minister said he was then engaged in conversations with the Milk Board but he was not at that time able to say exactly how he was to exercise his powers. This is the most important matter for the cheap milk schemes, because it is very certain that at least 1,000 of these schemes will be started all over the country. It is reasonable to suppose that every large town will have its cheap milk scheme. Under the Bill as it stands at present it means that at least 1,000 separate accounts will have to be kept and it will, in my submission, be quite impossible to say how the board stands on those accounts, as to whether they are losing or are going to gain through them. The power has now been given to the Minister for him to stand between the board and the people who sell to it, so that he will say the amount which has to be paid.
I ventured to offer the Minister a suggestion which, if I may say so, was a very sound one. It was that, instead of all this enormous number of accounts, it would be far better and far cheaper for the Minister to say, "We will fix the price, say, at is. 2d.," or some other agreed price which he will fix with the board. It would be a most invidious distinction to cast upon the board to put them in the position of saying, "We can-


not take part in any cheap milk scheme because we cannot afford to lose money on these milk schemes." It would be casting on the board a reflection which, I think, would be most unfair. It is for that reason that I ask the Minister how far he has gone with the board; has he been able to come to any agreement with them; and, if so, is he now able to give the Committee the terms of the agreement?

7.9 p.m.

Sir R. Dorman-Smith: I said in my Second Reading speech that I hoped that while this Bill was still before the House I should be able to give the information required. I do not think I was over-optimistic, but to-day I am afraid I cannot give the information for which the hon. Member for Carmarthen (Mr. Hop-kin) has asked. The negotiations are very far advanced, and I still hope that while the Bill is still before the House I shall be able to give some information.

Mr. T. Williams: Negotiations between whom?

Sir R, Dorman-Smith: There are lots of people involved—the board, the Treasury and my Department. I do hope that I shall not now be pressed. We have just altered the form, and I think we shall be able to get agreement. I am optimistic about it. The scheme will be a general scheme. It will be recommended to the local authorities that the board will be prepared to sell at such-and-such a price and the local authorities will buy from the board. The reply to the hon. Member for Stone (Sir J. Lamb) is that the local authorities will probably pay the board monthly. We shall pay for the accounting period, which will be agreed between ourselves and the board. If the Committee will not press me on the actual terms I shall be obliged, and I hope that I shall be able to carry out my hope which I expressed on Second Reading.

CLAUSE 3—(Payments to be made from Exchequer to boards in respect of milk used in manufacturing butter and cheese.)

The Chairman (Sir Dennis Herbert): The Amendment in the name of the hon.

Member for Carmarthen (Mr. Hopkin)— in page 5, line 7, leave out "half-year" and insert "month"—is out of order.

Motion made, and Question proposed, "That the Clause stand part of the Bill."

7.11 p.m.

Mr. Hopkin: May I ask the Committee to pay attention to the terms of Clause 3, because, in my submission, this Clause is one of the most important in the Bill. It proposes to make a very great and a vital change in the machinery of the Milk Marketing Board, and for that reason I would invite the attention of the Committee. For the reasons which I hope to put forward, I think that this Clause is a thoroughly bad one. I am quite prepared to believe that the Minister desires to make the milk scheme a success. I am quite ready to believe, also, that the Ministry do not desire to put any unnecessary difficulties in the way of the Milk Board, but under Clause 3 hon. Members will notice that, instead of monthly payments, the whole system has been changed regarding the payment of Government assistance on manufacturing milk to six-monthly payments. That is a very great change, and a change for the worse.
May I also ask the Committee to consider this: how is the system worked at present? The Milk Marketing Board gets, first of all, the price as it is obtained for liquid milk. Then it gets the price obtained for all the manufactured milk, milk manufactured for butter, cheese, cream, ice cream, condensed milk, milk powder, and so on. Then it has to make a calculation for the milk that is sold as milk in schools. After this a further calculation will have to be made for the cheap milk scheme. When all these calculations have been made, plus, as it is at present. the amount which it is to receive from the Government for the manufacturing milk, then it is able to send what amount the farmer is to receive on the whole of his liquid milk. What is the change? The change is that, instead of as it is at present—the ascertainments to be made monthly—they have to be made after six months. I want to ask the Minister, what is the reason for this change? Why has it been found necessary to alter the system that everybody agrees works well at present? At the present time, the board works on


monthly pools, and pays the farmers monthly. If the Clause is passed in its present form, during five months out of six months it will be impossible to fix the final price that the farmers ought to receive. The Committee ought to know what is the real reason for upsetting the present system, which works well. At the end of the month, the farmer knows exactly where he stands, but under this Clause there will be five months in which he will not know how much he is to receive from the Government by way of assistance in regard to manufacturing milk.
Let us suppose that at the end of the six months, as a result of fluctuations up and down during that period, ¼d. per gallon will come to the board on 125,000,000 gallons. The amount will have to be spread over the whole of the liquid market. Who is to receive that money? How is the Minister going to distribute it? Will it be put into the next pool price? If so, I can foresee that there will be a crop of actions against the Milk Marketing Board and the Minister, because to do that would be illogical and entirely wrong, because the money would be given to people whose proportions of milk for that month might be entirely different from the proportions which they had put into the pool before. Who is to get the money? The answer, of course, is that in the case of each farmer the board will have to go back for six months and see what proportion that farmer has put into the pool over the previous six months. Why have that tremendous amount of book-keeping and accountancy? What will be the advantage of it? Will it be to the advantage of anybody that this new system should be tried?
I submit that the Clause cannot be worked equitably. With the best will in the world, at the end of the six months, the Milk Marketing Board, or whoever has to distribute this amount of money, must do so more or less by a guess. Already the board have 135,000 separate accounts. Why does the Minister throw upon them this wholly unnecessary work of keeping each individual accounts and finding it out over the last six months? In this matter it is not a question of money. I believe the Minister mentioned that it is only a matter of £20,000. This is the only check we have on this sort of

thing, and I hope that hon. Members will see that this is a vital matter for the producers. If this Clause goes through, it will be bound to undermine that feeling of security and confidence which the farmers have in the board at the present time. I hope the House will agree that, unless the Minister has some reason which, so far, he has not divulged, it is unnecessary to change a system that works quite well at the present time.

7.20 p.m.

Mr. York: I should like to ask for your advice, Sir Dennis, on the subject of the Amendment in the name of the hon. Member for Carmarthen (Mr. Hopkin). Am I to understand that it will be impossible at any later stage of the Bill to move this Amendment or a similar Amendment?

The Chairman: I must not answer the hon. Member more than informally, because the next stage of the Bill will be a matter for Mr. Speaker, and not for me; but I would point out to him that it would require a new Money Resolution in order to move the Amendment in that particular form.

Mr. York: I apologise for my ignorance of the procedure, but it seems to me that if we allow the Clause to pass as it stands, and with the present wording of Subsection (1), we shall do a grave injustice. I find myself in great difficulty on the matter. If we allow the Clause to go through, I believe that the Milk Marketing Board will have its entire accounting system thrown out of joint, and the only advantage to the country will be that the Treasury's accounts will be somewhat simplified. I ask my right hon. Friend whether he cannot give some indication that it will be possible at some time to alter a few words in the Clause so as to help the Milk Marketing Board out of a very grave difficulty.

7.22 p.m.

Sir R. Dorman-Smith: It is true that there has been a change both in the way in which we make payments and also in the approach to the whole problem of how assistance should be given to the industry. Under previous Acts, the assistance has been given monthly, directly on the manufacturing milk. We have now changed the emphasis on the type of assistance that is being given. The main assistance is now to be given on the quality milk, and the method of paying


on the milk that is put into the manufacture of butter and cheese is in the form of price insurance in order to prevent the receipts of the Board on those quantities from dropping below a certain figure. Therefore, if there is to be this price insurance, it seems to me important that we should take it over a period and not month by month. Inasmuch as we have changed the method of giving assistance, it seems to the Government to be of real importance that we should take the longer period to determine what the payments under the system of price insurance should be.

Mr. Hopkin: If it is done purely on the ground of the amount, and as the Minister has himself said that the amount at stake is only £20,000, surely he will place on the other side the fact that it causes inconvenience and makes it impossible equitably to distribute the money when it is received.

Sir R. Dorman-Smith: That is not a new feature of the board's operations. At the present time, the board work their factory organisation on a six-monthly basis, and it might just as well be argued that it is impossible in that case to give back the exact amount. It is true that, probably, the board's accounting arrangements will have to be adjusted. I fully appreciate the difficulties which the board will have to face from the accounting point of view, but I do not think it will be impossible for them to face those difficulties, working on a broad basis, in much the same way as they do with their factory organisation. We are giving them a tremendous amount of assistance on quality milk, and I think they readily understand that if they are to get the payments on quality milk which we are going to refund them, they will also be in the position of having to take payment for their milk which goes into butter and cheese over a period, and not monthly.

Mr. Hopkin: Will the right hon. and gallant Gentleman answer my question as to whom he proposes that this money should be at the end of the period? At the end of six months, it will be known how much is to be paid to the Milk Marketing Board. To whom will the money be paid? Is it to be put into the next pool price, and if so, how can that be equitable?

Sir R. Dorman-Smith: It will be paid to the Milk Marketing Board, and it will be for them to dispose of it in the best possible manner.

Mr. York: I do not see how the board are going to spread the money they will receive over the price which the producers will receive.

Sir R. Dorman-Smith: I have pointed out that this is not an entirely new problem for the board, since they have the same problem with regard to their factary organisation. I am certain they will be able to overcome the difficulty in much the same way.

7.27 p.m.

Captain Heilgers: Am I right in assuming that this will be the position? In future, the Board are going to deal, over a six-monthly period, with a sum that will probably aggregate £50,000 in regard to the butter and cheese deficiency payments, but as they will deal with a sum of between £55,000,000 and £60,000,000 in all, the £50,000 which they are going to have over a six-monthly period will not be likely to dislocate their accounts to any great extent.

7.28 p.m.

Colonel Clarke: May I add to what the hon. Member for Carmarthen (Mr. Hopkin) has so ably said, that this is a matter which interests not only the Milk Marketing Board, but every farmer as well? I have been approached by a number of farmers who have told me that they hoped it would be possible for the system to remain on a monthly basis and not to be on a six-monthly basis.

CLAUSE 4— (Limitation of quantity of milk in respect of which Exchequer payments may be made.)

7.29 p.m.

Mr. T. Williams: I beg to move, in page 8, line 18, to leave out "and twenty-five."
This Amendment seeks to reduce by 25,000,000 gallons the amount of 125,000,000 gallons allocated for butter and cheese for which the subsidy can be collected. I had better make it clear at once that there is not a great deal of money involved in this Amendment. It is


concerned Infinitely more with principle than with money. I listened with interest to the very fine speech of my hon. Friend the Member for Carmarthen (Mr. Hopkin) on valuation and distribution and variations, and the grave and profound difficulties which would beset the Milk Marketing Board when this Bill came into operation. I have made a rapid calculation based on the known facts and the Financial Memorandum, and I find that for the present year the amount of money likely to accrue from the Treasury to the Milk Marketing Board is about £50,000. There are 150,000 producers and the amount is 6s. 8d. per annum, or 3s. 4d. per half year, and if that is not divided into monthly periods I can appreciate the shock which the Milk Marketing Board will get.
The point of the Amendment may be explained thus. From the commencement of the milk subsidy scheme, it has always been my opinion that, to the extent to which Parliament subsidised milk for manufacturing uses, unless simultaneously with any new production which was encouraged we found an outlet for the increased output in the liquid market, then to that extent, the liquid milk consumer is called upon to subsidise manufacturing milk. We have always argued with the right hon. Gentleman's predecessors, and we repeat the argument to him, that it is wrong policy on the part of any Government to subsidise milk that goes into manufacture, until they have explored every conceivable avenue to find a way of increasing the consumption of liquid milk. I recognise that Clause 2, which continues the school milk scheme and makes provision for the extension of similar facilities to expectant and nursing mothers and children under five, is all to the good, but as long as we permit the Milk Marketing Board to divert 250,000,000 gallons of milk to the factories, at an average of about 5¼d. per gallon, while the liquid milk consumer is paying 2s. 4d. a gallon, we are operating in the wrong direction. Lord Astor, in a statement circulated to Members of Parliament some time ago, worked out the figures, and after careful calculation, reached the conclusion that as the result of a large volume of milk being diverted to factory use, the liquid milk consumer in this country is virtually subsidising factory milk by 3d. a gallon. That is

a considerable item. If we were to put that 3d. per gallon on to the potential saving which could be made by an efficient distributive system, and if we were to add the results of elimination of the most uneconomic producers, the chances are that the price of liquid milk would reach a point at which millions of families who cannot at present buy enough for their elementary needs would be able to obtain liquid milk at a suitable price. That would in turn be reflected in the pool price to the farmers and would put them on a better financial basis than they are on, even with this subsidy.
The right hon. Gentleman may say, if we are willing to subsidise 100,000,000 gallons to go into the manufacture of butter and cheese, why not subsidise the additional 25,000,000 gallons? The answer is readily given. We think there ought to be some limit on this subsidy for manufacturing milk. We recognise that there is a period in the spring when, as a result of climatic conditions, the output of milk is in excess of what the liquid milk market can absorb under present conditions and at present prices. Therefore, some temporary arrangement might be made for dealing with that surplus during that exceptional period. But to reach a figure of 250,000,000 gallons and to subsidise that amount, attracting milk to a market which is unable to absorb it at present prices and with the wages of workpeople and unemployment benefit and old age pensions what they are to-day—that, we say, is to operate in the wrong direction. We do not want to amend the Bill fundamentally. We agree with the broad, general principle of Clauses 1 and 2. We recognise that there may be something in Clauses 3, 4 and 5, but to go to excess as theśe Clauses do is entirely wrong. I regard this as a serious Amendment and if my hon. Friends agree, I shall not hesitate to go into the Division Lobby in support of it as a protest against the principle of subsidising manufacturing milk before having examined all the possibilities of increasing liquid milk consumption in this country.

7.37 p.m.

Mr. Price: I support the Amendment, which I regard as an important part of the campaign to put the Milk Marketing Board in a sound position, and at the same time to help the dairy industry in


the only way in which it can be helped. As things are, one of the reasons for the high price of liquid milk is undoubtedly the fact that we are subsidising manufacturing milk. All steps that can be taken towards encouraging liquid milk and discouraging manufacturing milk are steps in the right direction. There must be a surplus owing to natural conditions during the spring and summer, and that surplus must be dealt with in some way, but we should regard any arrangement to deal with the surplus only as temporary and as a means to keep things going until there is a better consumption of liquid milk than there is at present. That alone will put the Milk Marketing Board in a sound position and also assist the dairy industry.
I think there is an improvement in this direction at present. The latest figures which I have received show that the quantity of manufacturing milk in the year which ended in March, 1937, was 342,000,000 gallons. In the following year that figure fell to 250,000,000 gallons, largely owing to the effect of drought. It rose again in the year which ended March, 1939, but not to the figure of earlier years, the quantity being 317,000,000 gallons. There appears to be a tendency for the quantity of manufacturing milk to decrease. At the same time the average price of liquid milk rose from 15.25d. to 16.08d. which shows that the subsidising of manufacturing milk tends to keep the liquid price too high. I have here a report of the Children's Minimum Council containing a statement which was sent to the Minister of Agriculture a few days ago. They state definitely, and I think with considerable justification that:
In present circumstances any expansion in production is likely to act as a check on consumption. It means simply that there is more milk to be disposed of. The bulk of it goes to the manufacturing market, and the price of liquid milk to the consumer is raised in order to compensate the farmers for the proportion sold at a loss. The expansion of demand and ultimately of production is thus checked. This vicious circle must be broken.

Mr. MacLaren: Hear, hear.

Mr. Price: I think many of us will agree with that statement although we may not all agree with the method by which it is to be done, and I know that my hon. Friend the Member for Burslem (Mr.

MacLaren) has his own particular method to deal with it. We are justified in moving this Amendment, if only to call attention to the undesirability of encouraging too much production to go into manufacture. I suggest that we must put a ceiling on the amount which goes into manufacture and that any step towards reducing the quantity used for manufacture and forcing the Government to encourage by all sorts of schemes the consumption of liquid milk, is a step in the right direction.

7.42 p.m.

Captain Heilgers: I was a little surprised to hear the hon. Member for the Forest of Dean (Mr. Price) taking the line which he has taken. I represent a division of an Eastern county, and we should be only too glad if the Milk Marketing Board's operations were confined to liquid milk. As it is, we have to carry milk for manufacture in the West and get in consequence a lower price for our milk. Almost all the manufactured milk comes from counties in the West. I think it is reckoned that the surplus in the industry is about 10 per cent. in the winter, but in the flush months of May and June, the industry may have to carry a much bigger surplus. Everyone will agree with hon. Members in wanting to have more liquid milk drunk, but I would remind them that the more liquid milk is drunk, the bigger surplus there must be. The making of butter and cheese is, after all, the work of fanners in this country, and at agricultural shows one can see this work being done by skilled operators. I should be very sorry to see those crafts dying out and if we are to put our nation on to an A.1 basis—or in present circumstances I should say if we are to continue our nation on an A.1 basis—we should encourage not only the consumption of liquid milk, but also the consumption of good farmhouse butter, than which nothing could be better for the younger generation.

7.45 p.m.

Mr. Hopkin: I rise to ask for information. I am sorry that I cannot understand the Amendment. As the Clause stands the position seems to be this: The Government say to the farmers, "You produce milk which satisfies the liquid milk market, and 250,000,000 gallons beyond that which goes into manufacturing, and we will pay you a subsidy.
But if by any chance you produce more than that you produce it at your peril and must like the price which you can get for it, which will be very small." As I understand the Amendment it says, "We desire to lower the amount on which you are paid from 250,000,000 gallons to 200,000,000 gallons." That will make it all the worse for the farmer, in this sense, that the Government will then say, "We do not desire you to produce any more than 200,000,000 gallons for manufacturing purposes." But is not that a policy of scarcity, is not that just the opposite of what we really want? The only alternative that I see to putting the subsidy on the manufacturing milk is to say to the farmer, "Produce as much milk as you like and we will see that you shall not lose by it." Having set out on a policy of plenty the Government will be equally well able to say, "We will see that the greater part of this milk goes to feed the women and children who most want it."
I should have thought that that would have been the policy; to reduce the amount on which a subsidy is paid would be a policy of scarcity. An increase of consumption in the liquid milk market is the thing we all desire, no matter in which part of the Committee we sit, but is there any hon. Member who can tell the Milk Marketing Board of any method which they are not employing to increase the liquid milk market? Is there any portion of the manufacturing milk now being used for chocolate, for ice cream, for condensed milk, for milk powder, which could be used in a better way? I do not think so. Therefore, the amount of manufacturing milk which is carried to-day by the Milk Marketing Board is the absolute minimum, unless, of course, we want to see the amount that is produced all through the country cut down, and that, I think, is not a policy which would commend itself to Members of this Committee.

7.48 p.m.

Sir J. Lamb: I hope that the Minister will resist this Amendment. It does not actually determine the amount of milk which shall go for manufacturing purposes, but it puts a ceiling to the amount and, in fact, reduces the ceiling, and there might be a reduction in production if the quantity of surplus milk became so great that the ceiling was reached. The Com-

mittee must not think that the Milk Marketing Board have any desire to divert to manufacturing purposes milk which could be sold for other purposes. It is to their advantage to sell as much of it as possible as liquid milk, because there they have the higher market. There is no danger of the Milk Marketing Board diverting milk to the manufacture of cheese and butter if they can dispose of it for any other purpose. An hon. Member said that an arrangement should be made for a temporary manipulation, and that is true to a certain extent, but when the quantity of liquid milk is so great that there is a surplus, we cannot say that that surplus must be used for butter and cheese, because factories have to maintain a certain nucleus of staff, otherwise they will not be there when we require them on other occasions.
If there is a surplus above the 200,000,000 gallons what are we going to do with it? The milk is there. If it is not going to be utilised even for butter and cheese, which is the least profitable manufacturing use, there will be a further loss, and in that case the Milk Marketing Board will have to consider increasing the price of liquid milk, and we do not want that. It will be seen, therefore, that there is a danger of defeating the object we all have in view, and that is to obtain cheaper liquid milk.

7.52 p.m.

Mr. John Morgan: I suppose that had we put down an Amendment to increase the quantity of milk it would have been ruled out of order on the ground that we were adding to the financial commitments of the taxpayer, and therefore my hon. Friend will understand that a discussion of the surplus milk problem could only be obtained by putting forward an Amendment in these terms. How to deal with the surplus milk is really the crux of the milk problem. That a farmer should have to sell one-third of his milk for manufacturing purposes at a price which in no case covers his costs of production is thoroughly unsatisfactory, especially when thousands upon thousands of people cannot afford to buy liquid milk at its present price. It is admitted that milk at 2s. 4d. a gallon is too dear for quite wide sections, and necessitious sections, of the community, and the point of this Amendment is to draw attention to the problem, and


to suggest that there are better ways of using that surplus milk than turning it into even chocolate or cream. To overlook that is to miss the whole point of the argument.
Why have the Government put in a ceiling figure? Obviously they want to put a restriction on the production of butter and cheese in this country. That may be satisfactory from the point of view that New Zealand and other countries are better suited to produce butter and cheese, and can at the same time be squeezed out of a market in which we can, perhaps, utilise the milk more satisfactorily than in the production of butter and cheese, which are in the lowest category of milk products. Import restrictions have now been placed upon processed milk products, presumably to drive more milk from the production of butter and cheese into the production of processed milk commodities. If that is so the Government are admitting that they are trying to increase the manufacture of processed milk products and they are not showing as real a desire to shift some of this surplus milk into other categories than manufacturing, as we should like to see. 
We gratefully acknowledge the provision which is made in the Bill for special schemes but we regret very much that there seem to be difficulties, outside the control of the Minister, over the development of those schemes. Presumably milk for those schemes will be available at anything between is. and is. 4d. a gallon and will represent a very definite economic increment to the farmer, while at the same time meeting the requirements of large sections of necessitous people, including children. We hope that these schemes will go forward speedily and will remove the necessity for diverting so much of this milk to manufacturing purposes. After all, there should be no need to carry more surplus than the Milk Marketing Board require as a reserve supply for the liquid milk market. We admit the need for a surplus, anything up to20 per cent., to carry the daily and seasonable variations in demand, but over and above that steps should be taken to try to force this extra milk to be used for more economic purposes. The Amendment suggests that the quantity of milk for butter and cheese should be reduced to 200,000,000 gallons. Automatically that would force the Milk

Marketing Board to get that milk into some other market. We have no objection to the board putting pressure upon the Government; they have exercised useful pressure in the past. In my opinion they are as anxious as anybody else to have surplus milk used more economically and more sensibly.
The point is, have the Government any other reason for fixing this ceiling figure than that of getting milk used more economically in the processing sections? In other words if they want to build up an emergency reserve of tinned milk they ought to indemnify the Milk Marketing Board for that service, not so much supporting the butter and cheese market as supporting the processed milk market if they are trying to get the board to supply milk to manufacturers who have some sort of understanding with the Government to build up reserves. That is another point arising out of this Amendment—that if the Government are interested in any way in promoting reserves of processed milk it is a service for which they are not paying the Milk Marketing Board and they should look into the matter. Over and above that we see in this Bill elements of hope that the surplus milk is going to be dealt with in a better way both from the point of view of the public and the producer. While we on this side are dissatisfied that such a large volume of milk should be going into manufacturing use, our attitude to other Sections of the Bill indicates our whole-hearted support of the plea of the Minister that milk should be used more sensibly and economically in any other direction.

7.57 p.m.

Sir E. Shepperson: I think every Member of the Committee is only too anxious to see the' consumption of liquid milk increased. Hon. Members opposite ask whether we are doing all we can to increase the consumption of liquid milk. I submit that we can increase its consumption if we cheapen the price to the consumers. Can we cheapen the price to them? I submit that we can if we remove the levy that is now charged upon liquid milk and pass the levy on to the manufactured milk products at present coming into this country.

7.59 p.m.

Sir R. Dorman-Smith: It is true that nobody wants to put more milk into


manufacture than is absolutely essential. I think we are all agreed upon that. I think, also, the Bill does hold out hope that a good deal of milk will be used in the cheap milk schemes. No limit has been set on the amount of money which can be expended on them. But there is more to it than this. If you are going to have a prosperous liquid milk market and you are going to get your producers to produce enough to serve that market, you must have a reserve pool, variously estimated, but let us say round about 20 per cent. all the year round. It may go up to very much more in some periods. If you are going to have that reserve you must have some method of dealing with it as time goes on; therefore you have to maintain some manufacturing industry, otherwise goodness knows what will happen to your reserve. You must have a certain amount of milk going into manufacture the whole time in addition to that 20 per cent. in order to keep the manufacturing industry itself working, or else it will probably close down. It is not just a question of saying, "We want to sell liquid milk and we shall go on selling it so that there will be no surplus at all." It is not quite as easy as that. If you increase the amount of milk going into liquid consumption you also increase not the percentage but the volume which you have to deal with in manufacture in some process or other.

Mr. Morgan: Is the right hon. Gentleman suggesting that the farmer should carry subsidies in order that the manufacturers may be kept in business?

Sir R. Dorman-Smith: The committee of investigation found that the cost of the reserve up to 20 per cent. was in fact borne by the consumer, and that over that amount the producer was bearing the burden. Therefore I do not think the consumer has any complaint on that. We are trying to allow for all the possible contingencies that may come about so that the producers can carry on and perform their full function in keeping this reserve pool, and we arrived at this figure of 125,000,000 gallons for butter and cheese based on past experience of what may happen if in fact we go on increasing liquid milk consumption. We hope we shall not have to get up to this figure. We are taking such steps as we can to enable the Milk Marketing Board to get the milk into higher categories of manu-

facturing commodities. We are doing that by making the market for our home producer by restricting imports from overseas and I think there is a lot in what the hon. Member for Doncaster (Mr. Morgan) said. If we can do that and keep our producers out of the butter and cheese market all the better, but if by any chance they have to go there it is only fair that the country should say they will provide for this amount of 250,000,000 gallons in case it needs to be used.

8.4 p.m.

Mr. A. V. Alexander: I think we should come back to the principle behind the Amendment. I take it, although the Ministry is moving in short spasms of temporary legislation from time to time, they are still supposed to have a long-term policy for agriculture in view and, if there is a long-term policy in view, it surely ought to be a well-balanced policy. In the case that my hon. Friend the Member for Don Valley (Mr. T. Williams) put, he certainly implied to me, and I am sure must have carried that implication to many others, that there is a point beyond which it is entirely uneconomic, not only from a national but from an agricultural point of view, to encourage milk for manufacture. A very able pamphlet published recently on the problems of agriculture cites a White Paper issued by the Baldwin Government in 1926 which says that this policy of subsidies was bound to be inequitable, bound to work out unevenly, and that the subsidy was bound to be given to people who had no need for it because of the variety of the character of land and of production in different varieties of circumstances, and it therefore came down against it.
Here is a case in point. You deal with this problem of what is now termed surplus milk. Take the figures prior to the introduction of the milk marketing scheme. As far as I have had experience of dealing with the balancing of supplies for the liquid milk market, prior to the milk marketing scheme there was far less milk available. What happened? There has been first a rise in price plus a guaranteed market provided by the Milk Marketing Board. If you examine the returns between 1932 and 1937 the figures speak for themselves. At the very time when we were hoping to get a better price


for producers for the liquid market they had to face the increasing amount of milk put into the board's hands, for which they are bound to find a market under the scheme and which has been continuously pulling down the pool price. But to suggest that the amount which has been put on the market as surplus is necessary is quite another thing. In fact, if we were having a proper consumption per head of the population of liquid milk, you could find a market for a much larger supply. But to deal with the economics of the situation, which is what the Minister is trying to do in this proposal, it has diverted a great deal of general agricultural effort into one channel of production of milk where it ought to have been properly carrying on its functions in a wider sense. That is the position, and you might just as well face up to it.
Take the question of the variety of costs—the thing that the Conservative Government had in mind in 1926. I appeared for 36 days before the Committee of Investigation, from whose report the Minister quoted. I had passing through my hands all the costs of production of milk so far as they were available to the committee. So far as they were reliable is another matter, although we owe them a debt of gratitude for much of the excellent, and in some cases voluntary, work done by representatives of the universities. But the actual figures of costs of production on the farms varied from a figure below 6d. a gallon up to is. 2d.—an enormous margin. You are guaranteeing a price backed up by a subsidy to whoever is producing milk, whether they require a subsidy or not. That is one of the inherent difficulties that you have to deal with. We know that the Minister has difficulties to face and we are not quarrelling wholly in principle with the method, but we say that in detail he really should begin to so set his limit to the subsidy to be paid that there is some prospect of reducing the surplus milk diverted into manufacture at the cost of keeping up the price of liquid milk. That is the intention of the Amendment.
This is not a party issue. We have had charming speeches, and well put, from the hon. Member for Don Valley, who has become such a tower of strength to us, from the hon. Member for Doncaster

(Mr. J. Morgan) and from the hon. Member for Carmarthen (Mr. Hopkin)—I sometimes wonder where he really stands—but the variety of speeches on this side indicates that this is not a party issue as such. It is a problem for which we all want to find a solution. Unless you make some better beginning you are not going to find the solution that you ought to find. It is suggested that it would be a good thing to go on increasing the production of milk even if you had to have a larger amount of manufacture. I should say, speaking from my knowledge of those who are the largest and best customers of the Milk Marketing Board, that the percentage required is nothing like 20 per cent. Surely we ought not to sit down under the assumption that we must encourage the farmer to produce a surplus equal to 20 per cent. of the whole liquid market. It becomes far too big a charge upon the general liquid market at the expense of the consumer. It is said that by putting on tariffs we can do this without it becoming an extra charge on the consumer. How are you going to deal with such a restriction unless you are going to deal with Dominion imports? No one knows better than the hon. Member for Leominster (Sir E. Shepperson) and the hon. Member for Stone (Sir J. Lamb) what an enormous proportion of dairy products comes from the Dominions. Is it going to be the policy of agricultural Members to limit not merely the comparatively small quantities imported from foreign countries but imports from the Dominions?

Sir J. Lamb: Encourage secondary industries in the Dominions.

Mr. Alexander: What about your own secondary industries? What about engineering? What about our cotton? What about our heavy industries? The fact is that the true solution is to have as soon as you can a really balanced policy of agriculture on a long-term view. Ministers have for a long time said that they were going to produce such a policy, but they have not done so yet. I have no doubt that the Minister will have the Whips on and that the Division will go against us, but I hope that he will keep in mind the facts that we have put to him. We do not quarrel with much of this Bill, which the Minister says is a temporary one. Nearly all the policy of the Minister


is temporary, and perhaps before he produces his next Bill he will have a more rational, sound and economic policy to submit.

8.16 p.m.

Mr. David Adams: I do not propose to occupy more than a moment or two, but I come from a Special Area which looks forward with some hope and anticipation to the cheapening of liquid milk. Whilst we are grateful for what the Bill proposes with regard to certain sections of the community, such as aid for expectant mothers and school children, there is a large section of the community who are being continually assailed in one way or another to increase their consumption of liquid milk. We have in this proposition neither more nor less than a decision to diminish the possible means of the great industrial population of this country to obtain this prime foodstuff at a reasonable price. The Government have already decided to put certain tariffs upon all processed milk coming in from overseas and in that way deliberately to increase the cost of certain classes of milk to the industrial population. I have already said in this House

that the corporation with which I am associated has expended nearly one penny in the pound on rates in giving free milk.

The Chairman: The hon. Gentleman appears to be making a Second Reading speech on the Bill.

Mr. Adams: All that I am desiring to do is to express the profound disappointment that I and my constituents have that the policy embodied in this Measure and as defended by the Minister who has just spoken is, in fact, although he will not admit it, to increase the price of milk to the consuming public—

The Chairman: The hon. Member has confirmed me in my opinion that he is trying to make a Second Reading speech.

Mr. Adams: I was making a protest, Sir Dennis.

Question put, "That the words proposed to be left out stand part of the Clause."

The Committee divided: Ayes, 193; Noes, 129.

Division No. 239.]
AYES.
[8.20 p.m.


Acland-Troyte, Lt.-Col. G. J.
Crookshank, Capt. Rt. Hon. H. F. C.
Harbord, Sir A.


Adams, S. V. T. (Leeds, W.)
Cross, R. H.
Heilgers, Captain F. F. A.


Albery, Sir Irving
Crossley, A. C.
Hely-Hutchinson, M. R.


Aske, Sir R. W.
Crowder, J. F. E.
Heneage, Lieut.-Colonel A. P.


Baldwin-Webb, Col. J.
Cruddas, Col. B.
Hepworth, J.


Balfour, G. (Hampstead)
Culverwell, C. T.
Higgs, W. F.


Balfour, Capt. H. H. (Isle of Thanet)
Davies, C. (Montgomery)
Holdsworth, H.


Barrie, Sir C. C.
De Chair, S. S.
Holmes, J. S.


Beamish, Rear-Admiral T. P. H.
Denman, Hon. R. D.
Hudson, Rt. Hon. R. S. (Southport)


Beauchamp, Sir B. C.
Despencer-Robertson, Major J. A. F.
Hume, Sir G- H.


Beaumont, Hon. R. E. B. (Portsm'h)
Dorman-Smith, Col. Rt. Hon. Sir R. H.
Hunter, T.


Bennett, Sir E. N.
Drewe, C.
Hurd, Sir P. A.


Bird, Sir R. B.
Dugdale, Captain T. L.
Hutchinson, G. C.


Blair, Sir R.
Duncan, J. A. L.
Jennings, R,


Boothby, R. J. G.
Eastwood, J. F.
Jones, Sir H. Haydn (Merioneth)


Boulton, W. W.
Eckersley, P. T.
Jones, L. (Swansea W.)


Bower, Comdr. R. T.
Edmondson, Major Sir J.
Kellett, Major E. 0.


Boyce, H. Leslie
Ellis, Sir G.
Kerr, H. W. (Oldham)


Brass, Sir W.
Elliston, Capt. G. S
Lamb, Sir J. Q.


Briscoe, Capt. R. G.
Emmott, C. E. G, C.
Law, R. K. (Hull, S.W.)


Broadbridge, Sir G. T.
Emrys-Evans, P. V.
Leech, Sir J. W.


Brown, Brig.-Gen. H. C. (Newbury)
Entwistle, Sir C. F.
Lees-Jones, J.


Browne, A. C. (Belfast, W.)
Erskine-Hill, A. G.
Leighton, Major B. E. P.


Bull, B. B.
Evans, D. 0. (Cardigan)
Levy, T.


Butcher, H. W.
Fildes, Sir H.
Liddall, W. S.


Campbell, Sir E. T.
Fleming, E. L.
Lindsay, K. M.


Carver, Major W. H.
Fremantle, Sir F. E.
Lipson, D. L.


Cary, R. A.
Furness, S. N.
Little, Sir E. Graham-


Cazalet, Thelma (Islington, E.)
Gibson, Sir C. G. (Pudsey and Otley)
Llewellin, Colonel J. J.


Channon, H.
Goldie, N. B.
Lloyd, G. W.


Chapman, A. (Rutherglen)
Gower, Sir R. V.
Loftus, P. C.


Christie, J. A.
Graham, Captain A. C. (Wirral)
Mabane, W. (Huddersfield)


Clarke, Colonel R. S. (E. Grinstead)
Grant-Ferris, Flight-Lieutenant R.
MacAndrew, Colonel Sir C. G.


Clydesdale, Marquess of
Granville, E. L.
McEwen, Capt. J. H. F.


Colfox, Major Sir W. P.
Grattan-Doyle, Sir N.
McKie, J. H.


Colville, Rt. Hon. John
Greene, W. P. C. (Worcester)
Maitland, Sir Adam


Cooke, J. D. (Hammersmith, S.)
Gridley, Sir A. B.
Makins, Brigadier-General Sir Ernest


Cooper, Rt. Hn. T. M. (E'nburgh, W.)
Guest, Maj. Hon. 0. (C'mb'rw'll, N.W.)
Manningham-Bufler, Sir M.


Courthope, Col. Rt. Hon. Sir G. L.
Gunston, Capt. Sir D. W.
Margesson, Capt. Rt. Hon. H. D. R.


Craven-Ellis, W.
Hannah, I. C.
Marsden, Commander A.


Crooke, Sir J. Smedley
Hannon, Sir P. J. H.
Maxwell, Hon. S. A.




Mellor, Sir J. S. P. (Tamworth)
Ropner, Colonel L.
Tasker, Sir R. I.


Mills, Major J. D. (New Forest)
Rosbotham, Sir T.
Thomas, J. P. L.


Moore, Lieut.-Colonel Sir T. C. R.
Ross Taylor, W. (Woodbridge)
Thomson, Sir J. D. W.


Moreing, A. C.
Ruggles-Brise, Colonel Sir E. A.
Thorneycroft, G. E. P.


Morgan, R. H. (Worcester, Stourbridge)
Russell, S. H. M. (Darwen)
Titchfield, Marquess of


Morris-Jones, Sir Henry
Salmon, Sir I.
Touche, G. C.


Morrison, G. A. (Scottish Univ's.)
Salt, E. W.
Tufnell, Lieut.-Commander R. L.


Munro, P.
Samuel, M. R. A.
Ward, Irene M. B. (Wallsend)


Nall, Sir J.
Sandeman, Sir N. S.
Wardlaw-Milne, Sir J. S.


Neven-Spence, Major B. H. H.
Sanderson, Sir F. B.
Watt, Lt.-Col. G. S. Harvie


Nicholson, G. (Farnham)
Schuster, Sir G. E.
Webbe, Sir W. Harold


Nicolson, Hon. H. G.
Selley, H. R.
Wedderburn, H. J. S.


Orr-Ewing, I. L.
Shaw, Captain W. T. (Forfar)
Whiteley, Major J. P. (Buckingham)


Palmer, G. E. H.
Shepperson, Sir E. W.
Wickham, Lt.-Col. E. T. R.


Parkins, W. H. D.
Smith, Bracewell (Dulwich)
Williams, Sir H. G. (Croydon, S.)


Pickthorn, K. W. M.
Smith, Sir R. W. (Aberdeen)
Willoughby de Eresby, Lord


Pilkington, R.
Smithers, Sir W.
Winterton, Rt. Hon. Earl


Procter, Major H. A.
Snadden, W. McN.
Wright, Wing-commander J. A. C.


Radford, E. A.
Somervell, Rt. Hon. Sir Donald
York, C.


Ramsbotham, Rt. Hon. H.
Somerville, Sir A. A. (Windsor)
Young, A. S. L. (Partick)


Ramsden, Sir E.
Spears, Brigadier-General E. L.



Reed, A. C. (Exeter)
Strauss, H. G. (Norwich)
TELLERS FOR THE AYES —


Reed, Sir H. S. (Aylesbury)
Strickland, Captain W. F.
Mr. James Stuart and Mr.


Romer, J. R. 
Sueter, Rear-Admiral Sir M. F.
Buchan Hepburn.


Rickards, G. W. (Skipton)
Sutcliffe. H.





NOES.


Adams, D. (Consett)
Harris, Sir P. A.
Pearson, A.


Adams, D. M. (Poplar, S.)
Harvey, T. E. (Eng. Univ's.)
Pethick-Lawrence, Rt. Hon. F. W.


Adamson, Jennie L. (Dartford)
Hayday, A.
Price, M. P.


Adamson, W. M.
Henderson, A. (Kingswinford)
Pritt, D. N.


Alexander, Rt. Hon. A. V. (H'lsbr.)
Henderson, J. (Ardwick)
Quibell, D. J. K.


Ammon, C. G.
Henderson, T. (Tradeston)
Rathbone, Eleanor (English Univ's.)


Banfield, J. W.
Hills, A. (Pontefract)
Richards, R. (Wrexham)


Barnes, A. J.
Hollins, A.
Ridley, G.


Barr, J.
Jenkins, A. (Pontypool)
Riley, B.


Batey, J.
Jenkins, Sir W. (Neath)
Ritson, J.


Benn, Rt. Hon. W, W.
John, W.
Robinson, W. A. (St. Helens)


Benson, G.
Jones, A. C. (Shipley)
Sexton, T. M.


Broad, F. A.
Kennedy, Rt. Hon. T.
Shinwell, E.


Bromfield, W.
Kirby, B. V.
Silkin, L.


Brown, C. (Mansfield)
Kirkwood, D.
Silverman, S. S.


Buchanan, G.
Lathan, G.
Simpson, F. B.


Burke, W. A.
Lawson, J. J. 
Sloan, A.


Cape, T.
Leach, W.
Smith, Ben (Rotherhithe)


Cluse, W. S.
Lee, F.
Smith, E. (Stoke)


Cooks, F. S.
Leonard, W.
Smith, T. (Normanton)


Collindridge, F.
Leslie, J. R.
Sorensen, R. W.


Cove, W. G.
Logan, D. G.
Stephen, C.


Daggar, G.
Lunn, W.
Stewart, W. J. (H'ght'n-le-Sp'ng)


Dalton, H.
Macdonald, G. (Incs)
Stokes, R. R.


Davies, R. J. (Westhoughton)
McEntee, V. La T.
Summerskill, Dr. Edith


Davies, S. O. (Merthyr)
McGhee, H. G.
Taylor, R. J. (Morpeth)


Day, H.
McGovern, J.
Thorne, W.


Dobbie, W.
MacLaren, A.
Thurtle, E.


Dunn, E. (Rother Valley)
Maclean, N.
Tinker, J. J.


Edwards, Sir C. (Bedwellty)
Mainwaring, W. H.
Viant, S. P.


Edwards, N. (Caerphilly)
Mander, G. le M.
Watkins, F.C.


Evans, E. (Univ. of Wales)
Marshall, F.
Watson, W. McL.


Foot, D. M,
Mathers, G.
Wedgwood, Rt. Hon. J. C.


Gardner, B. W.
Maxton, J.
Welsh, J. C.


Gibson, R, (Greenock)
Messer, F.
Wastwood, J.


Green, W. H. (Deptford)
Milner, Major J.
Wilkinson, Ellen


Greenwood, Rt. Hon. A.
Montague, F.
Williams, E. J. (Ogmore)


Grenfell, D. R.
Morgan, J. (York, W.R., Doncaster)
Williams, T. (Don Valley)


Griffith, F. Kingsley (M'ddl'sbro, W.)
Morrison, Rt. Hon. H. (Hackney, S.)
Wilmot, John


Griffiths, J. (Llanelly)
Morrison, R. C. (Tottenham. N.)
Woods, G. S. (Finsbury)


Groves, T. E.
Noel-Baker. P. J.
Young, Sir R. (Newton)


Hall, G. H. (Aberdare)
Oliver, G. H.



Hall, J. H. (Whitechapel)
Paling, W.
TELLERS FOR THE NOES.—


Hardie, Agnes
Parkinson, J. A.
Mr. Whiteley and Mr. Charleton.


Question put, and agreed to.

Clause ordered to stand part of the Bill.

Clauses 5 and 6 ordered to stand part of the Bill.

CLAUSE 7—(Extension of functions of consumers' committees.)

Motion made, and Question proposed, "That the Clause stand part of the Bill."

8.29 p.m.

Mr. Alexander: I would like to ask a question on this Clause about the functions of the consumers' committee. When the committee is brought into consultation will all the parties concerned in the matter which is before the committee be summoned and brought into conference? It seems reasonable that anyone who is ultimately a party to the matter which is


laid before the committee should be brought into consultation. What is the practice, and what is the intention of the Minister?

Mr. T. Williams: Before the right hon. and gallant Gentleman replies may I call his attention to the following words in the Clause:
Any consumers' committee may be brought into consultation under Sub-section (t) of Section thirteen of the Agricultural Marketing Act, 1933.
How many consumers' committees have been brought into existence?

8.31 p.m.

Sir R. Dorman-Smith: I frankly admit that those two questions cannot be answered at the moment. What has happened in the past has been that there has been no legal obligation to consult consumers' committees, but we now think it well that there should be. As to the right of parties concerned to be brought into consultation, I cannot understand what the right hon. Gentleman has in mind. I expect he has something; he usually has.

Mr. Alexander: If you are bringing into actual consultation of a compulsory character the consumers' committees, anyone who is likely to be affected by a decision arrived at by a consumers' committee should be given notice of the consultation and, if necessary, should have the right to put his case.

Sir R. Dorman-Smith: I think that is the case at the present time, but I will look into that point. As to the actual numbers of consumers' committees, there is one for Scotland, one for England, and one for Great Britain.

Mr. J. Morgan: The Clause appears to make a substantial advance in the right of a consumers' committee to get evidence and to find out what is really behind the negotiations. Will the consumers' committees have any more powers than they had before and will they serve any other purpose than they have served before? Up to now they have been practically useless and have had practically no influence upon the position. If, as the Minister has said, they will carry on as before, I do not see why you need to legalise their position. They have been ineffective. Is it a fact that they are to have more powers than before?

Sir R. Dorman-Smith: There is no statutory obligation to-day for a board to consult a consumers' committee, although in practice boards do consult them. Now we are laying it down that there must be consultation before a decision is taken by a board. A consumers' committee can make representations to the Minister and can hold things up while those representations are being made.

Mr. Morgan: They will, in fact, be on a better footing than they have been before?

Sir R. Dorman-Smith: Yes, they will be on a better footing than before.

Mr. Morgan: And will you take more notice of them?

Sir R. Dorman-Smith: That is the intention.

Mr. Hopkin: The Minister may direct one of these committees to do a certain piece of work, such as to ascertain the cost of distribution of milk. Is it possible for the committee to go into consultation with the Milk Marketing Board, and with the right hon. and gallant Gentleman himself, in order to get those costs down?

Sir R. Dorman-Smith: I do not think that will be possible under the Bill. We should need special powers for them.

Mr. T. Williams: The right hon. and gallant Gentleman has told us how many consumers' committees have been brought into existence. I remember that the Cutforth Committee investigated the cost of distribution. The committee made recommendations which have all, of course, been ignored. The consumers' committee referred to in Clause 7 is, however, a totally different thing from the Cutforth Committee, that is to say a committee that will be brought into consultation—

Sir R. Dorman-Smith: It is not a reorganisation committee, as the Cutforth Committee was.

Mr. J. Morgan: I am still not quite clear about this matter. Sub-section (1) of Clause 7 says:
and the functions of consumers' committees shall be extended accordingly.
Extended in what direction? I feel that we have not had quite the explanation to which we are entitled. Obviously, if we


are not giving them any more powers, seeing that it is said that their functions shall be extended accordingly, there must be some functions that are to be extended.

Sir R. Dorman-Smith: The Sub-section deals with a milk product marketing scheme and a milk product development scheme, and the word "accordingly" refers to these two schemes.

Clauses 8, 9 and 10 ordered to stand part of the Bill.

SCHEDULE.—(Payments in Respect of Quality Milk.)

8.38 p.m.

The Under-Secretary of State for Scotland (Mr. Wedderburn): I beg to move, in page 15, to leave out line 19.
This Amendment and the following one—In page 15, line 20, column 1, after "Tested," to insert "or Certified"— relate to the sale of Certified milk. Last year the main Scottish Board informed us that they were going to pay, out of their own funds, an additional premium of ⅛d. a gallon on Certified milk sold as Certified milk, over and above the ordinary T.T. premium. Certified milk producers usually have a surplus which is not sold as Certified milk, but is sold as T.T. milk at the ordinary T.T. price and with the ordinary premium. The line in the Schedule which we propose to leave out was put in in order to give statutory recognition to what the main Scottish Board have been doing, but we find a difficulty in Sub-section (4) (c) of Clause 1 which provides that:
Milk shall be deemed to be accredited milk, standard milk, tuberculin tested milk, or certified milk, if, and only if, when the milk was sold or, as the case may be, used, the producer thereof was the holder, or entitled to the benefit, of a licence … authorising him to use the special designation 'accredited,' 'standard' 'tuberculin tested' or 'certified'.
If the Schedule were left as it is, it would mean that the Board would be legally obliged to pay this ⅛ d. on all milk produced by certified producers, and that was never contemplated. The Amendment would relieve them of that obligation. But it will still be possible for them to continue to pay out of their own funds the additional ⅛d. on Certified milk sold

as Certified milk, and the Board have informed us that it is their intention to continue these payments.

Amendment agreed to.

Further Amendment made:

In page 15, line 20, column r, after "Tested," insert "or Certified".— [Mr. Wedderburn.]

8.41 p.m.

Mr. Alexander: I beg to move, in page 15, line 25, column 3, to leave out "⅝," and to insert "½."
We want some explanation from the Minister about certain differences which appear to us to exist in the Schedule. Reading carefully the very important language in the earlier paragraphs, we can deduce fairly clearly that Table I relates to milk sold by wholesalers, and Table II to milk sold by retailers. I understand from the Minister that that is correct. If we take the third sub-paragraph in each of these two tables, we find the following difference. In the case of milk sold wholesale, milk from an attested herd which is not accredited, standard, tuberculin tested or certified milk receives a subsidy of Id. per gallon from the Milk Board, in respect of which the Government Exchequer contribution will be ½d. In the case of milk sold by retail—and in this case, therefore, it must be by the producer-retailer—accredited or standard milk which is not tuberculin tested or certified milk and is not milk from an attested herd, receives the same subsidy from the board, namely, id. per gallon, but the Government pays ⅝d. Why?
A great deal has happened during the last two or three years in the gradual expansion of favours to the producer-retailer section of the industry, and the extent to which they have been relieved of levies has made a fairly substantial difference to the finance of the scheme and of the pool. Possibly it may be assumed that the intention of the Government is to recoup the Milk Board to some extent for the reduction in the levies which they have charged to the producer-retailers. This section of the industry, which already has the opportunity, in the turnover both on the production and on the sale of the commodity, to make a double profit, and has been relieved of a large part of the levy, as distinguished from producers for wholesale distribution, is now to have this subsidy.

Sir R. Dorman-Smith: I think the right hon. Gentleman is comparing the third category in Table I with the third category in Table II, but actually the accredited or standard milk in Table II should be taken with the accredited or standard milk in Table I, and this latter is the second category in Table I.

Mr. Alexander: Perhaps the Minister can give us a little more explanation of the working of the thing. In Table I, which deals with milk sold wholesale, we have the words:
Milk from an attested herd which is not Accredited, Standard, Tuberculin Tested or Certified Milk.
That category gets ½d. from the Exchequer. In Table II we have:
Accredited or Standard Milk which is not Tuberculin Tested or Certified Milk and is not milk from an attested herd.
That gets a higher rate of contribution from the Government. At any rate, that is how it looks on the face of it. In the second paragraph of Table I we have:
Accredited or Standard Milk which is not Tuberculin Tested or Certified Milk and is not milk from an attested herd.
That gets 1¼d. a gallon from the board, and the Minister suggests that we ought to compare that with the third category in Table II. If the argument of the Government is that these two categories are in all respects similar, that would be an answer to the Amendment, but I should like to know what is the explanation of the differential subsidy.

8.45 p.m.

Mr. J. Morgan: The Minister has drawn our attention to the fact that the final paragraph should be related to the second paragraph in the first table, where the figure is 1¼d. But in the second column the figure is ¾d., whereas that below it is ⅝d. Why is there this difference?

8.46 p.m.

Sir R. Dorman-Smith: Really the wholesaler and the retailer are being treated in exactly the same way by the Exchequer, and what the Exchequer is going to do is to pay half the old premium and the whole of the new premium. The producer-retailers' contributions towards the board arc worked out in a different way from those of the wholesalers. That is where the discrepancy arises. Before this came into operation, the board was paying Id. a gallon in the case of producers selling wholesale, and ¼d. a gallon in the

case of producers selling retail. The retailer gets ¼d. plus ⅜d., which is⅝d.; and the wholesaler gets ¼d. plus ½d., which makes ¾d.

8.48 p.m.

Mr. T. Williams: Earlier on we argued that there were low-grade milks receiving premiums which we thought they ought not to receive. Line 15 says:
Milk from an attested herd which is not Accredited, Standard, Tuberculin Tested or Certified Milk.
These get a subsidy from the Treasury if sold wholesale. I have never heard any explanation why low-grade milk should get any subsidy at all.

Amendment, by leave, withdrawn.

Motion made, and Question proposed,

"That this Schedule be the Schedule to the Bill."

8.49 p.m.

Mr. Alexander: My hon. Friend the Member for Don Valley (Mr. T. Williams) has pointed out that, under this, we are to pay a subsidy for milk from attested herds, although the milk does not reach certain specified qualities. In the case of milk sold retail, there is no such wording as is found in the wholesale table. The hon. Member for Don Valley wants to know the reason for that difference. Before the Minister replies, I must say that I very much regret that I was not able to be here to support my hon. Friend on the first Amendment that was moved to-day. We are asking the taxpayers to subsidise milk of a standard which every producer ought to attain without any help at all, because it would be his duty to maintain that standard if licensed to sell milk to the public. It is unreasonable that the taxpayer should be called upon to provide a subsidy for what ought to be the ordinary standard of cleanliness.

8.51 p.m.

Dr. Edith Summerskill: I feel that the most undesirable feature of the Bill is the fact that the taxpayer is being asked to subsidise milk which is neither clean nor pure nor safe. The object of the Bill, outlined in the Preamble—

The Deputy-Chairman: The hon. Member must not discuss a matter which has been discussed already on the first Amendment to-day.

Mr. T. Williams: Is my hon. Friend not entitled to raise a question which


comes under the Schedule, on the Motion "That this be the Schedule to the Bill"? It is true that an earlier Amendment dealt with the words "accredited milk, standard milk." My hon. Friend is now directing the attention of the Committee to milk from an attested herd which is not accredited, standard, tuberculin tested or certified. Is she not entitled to do that?

The Deputy-Chairman: That is quite correct. My impression was that the hon. Member was making a general indictment against the Bill.

Dr. Summerskill: I will confine myself to the Schedule. In the Schedule the words "quality milk" occur. I think that conveys the idea to the general public and to the Committee of milk that is safe and clean. Here we are asked to subsidise accredited and standard milk which is not safe, and which is, in fact, a danger to the community. The Minister told us that this was a temporary Measure, but even in a temporary Measure he should concern himself particularly with the kinds of milk which are described in the Schedule. Accredited and standard milk are not safe.

The Deputy-Chairman: The hon. Member is going outside the Schedule. We are discussing the allocation of money to be contributed by the Treasury.

Dr. Summerskill: I am suggesting that we should not give one penny to the producers of this kind of milk. If I confine myself to that, and tell the Committee why we should not, surely I am in order. In this country 40 per cent, of the cows have tuberculosis, and these are the cows which are producing accredited and standard milk. I want to remind the Minister that every year 2,000 children die as the result of infection from milk which is called accredited and standard milk, and that three-quarters of the cases of Cervical Glands and three-fifths of the cases of infected bone in children are due to infected milk. Yet the Minister has the temerity to tell us that he is going to subsidise this milk, which is a danger to the community. Because it is called graded and standard milk—I am sure that I am keeping within the Schedule, Colonel Clifton Brown—the farmers and producers are to be subsidised. I suggest to the Minister that nobody in this country should profit by producing milk of this kind, and I ask him to reconsider the Schedule.

8.56 p.m.

Mr. Brooke: This Schedule fixes the premiums that are to be offered and paid to the producers of quality milk in order to encourage the production of such milk. The premium on tuberculin-tested or certified milk is to be 2¼d. per gallon, but the premium enjoyed by tuberculin-tested milk in the retail market on sale to the public is 1s. a gallon, and on certified milk is. 8d. per gallon, I do not think that the problem of stimulating the production of quality milks can be solved solely by an adjustment of the premium which the producer is to enjoy, quite apart from the natural demand that ought to be created all the time by a reasonable price asked of the consumer for these milks. The right hon. Gentleman the Member for Hillsborough (Mr. Alexander) suggested, and I think it was accepted by Members in all parts of the Committee, that we all fundamentally in our milk policy want to find the correct solution—

The Deputy-Chairman: The question of the correct solution of milk policy does not come under this Schedule, which is limited to the way money may be contributed.

Mr. Brooke: I beg your pardon, Colonel Clifton Brown. I am sure that I was in the wrong, but if I may proceed to the end of my sentence, I was going to say that a great opportunity is being missed by failing to control the production of milk through the fixing of these premiums. If the producer of non-graded milk was made to meet the premium that is to be received—

The Deputy-Chairman: That would be a very good argument to use on Second Reading, but not on the Schedule, which lays down certain details which are not principles. It would also be a very useful argument on the Third Reading, but the hon. Member is going outside the scope of the Schedule.

Mr. Brooke: I bow to your Ruling, Colonel Clifton Brown. I had not the opportunity to speak on the Second Reading, but I shall be glad to speak on the Third Reading if you will afford me that opportunity.

8.49 p.m.

Mr. Hopkin: May I refer to one point which has been raised in the Debate, on the question of the 40 per cent. T.B.


in herds? I mentioned in my speech on Second Reading that there is not a shadow of evidence of any kind that the herds to-day are infected with T.B. to anything like the extent of 40 per cent. I also pointed out that the figure of 40 per cent. arose from the Gowland Hopkins Report in which that figure was fixed on the committee having examined 144 herds out of 140,000.

The Deputy-Chairman: I cannot see what relation this has to- the Schedule.

Mr. Hopkin: I thought that I might be able to get round it by replying to the statement which had previously been made and which I respectfully submit, is not correct.

Dr. Summerskill: As I made the statement, may I be allowed to make an explanation?

Bill reported, with Amendments; as amended, to be considered To-morrow.

Orders of the Day — WHEAT (AMENDMENT) BILL.

Order for Consideration of Lords Amendments read.

9.1 p.m.

Sir R. Dorman-Smith: I beg to move, "That the Lords Amendments be now considered."
Perhaps it may for the convenience of the House if I give a brief resume of what these Amendments mean. None of them raises any new question of principle at all. For the most part they are either of a drafting character or are certain Amendments of detail of the machinery. A number of them actually have come about as the result of the Wheat Commission having to draft the by-laws which have to be made as soon as the Bill becomes law. There are, however, two Amendments which are of some substance. The first one is represented by the new Sub-section (7) to Clause 7, to which the first Amendment which will come before the House is consequential. The effect of the new Subsection will be to grant a tolerance to those millers who happen to include rather more than the maximum of wheat content in provender mixture destined for livestock. The new Sub-section provides that in such circumstances the

miller shall make the quota payment only in respect of the excess of the wheat content and not on the whole of it. I think that that will go a long way to meet what was put forward in all parts of the House, namely, that the small miller should have protection.
The other Amendment of substance is a new Sub-section (4) to Clause 8, the object of which is to provide machinery to give effect to what, I think, was the agreed intention, namely, that there should be no quota payment liability in respect of certain milled wheaten substances, so that the amount of the liability should be suitably reduced, provided that they were used as food for livestock. But for this Sub-section hardship might arise to the importer. The importer at the time of importation of low-grade flour could not be certain whether that flour would be used for livestock or not. In such circumstances he could not claim any remission of quota payment at the time of importation. The new Sub-section provides that, if the importer makes a quota payment and can subsequently prove to the Wheat Commission that the flour has in fact been used as food for livestock, he can get a rebate. This will also affect, though not to anything like the same amount, the home miller, who would generally know the destination of his flour. Most of the other Amendments that will come before the House are consequential on the addition of these new Sub-sections, and, if it is the view of the House, I propose, after this explanation, to move formally each succeeding Amendment as it is reached, and then answer any questions that may arise on them.

9.5 p.m.

Mr. Alexander: I doubt very much whether from an examination of these-very technical Amendments there would be one in a hundred members who could possibly understand them, unless they had made it a very special study and task. In view of the long discussion we had in the last stage of the Bill in this House, sitting very late at night, I have taken special care not to put myself in the position of having to understand every word in these Amendments, but I have been guided by an expert, who took the same view as myself on the previous stage, and I can assure my hon. Friends that there is nothing in these Lords Amendments to which we need take ex-


ception, based upon the policy we took up in the last stage of the discussion. So far as I am concerned, I should not mind if the right hon. Gentleman moved the adoption of the Amendments en bloc.

Lords Amendments accordingly considered.

Mr. Deputy-Speaker (Colonel Clifton Brown): Will it be for the convenience of the House to take the Amendments en bloc?

Hon. Members: Agreed. Lords Amendments agreed to.

Orders of the Day — AIR MINISTRY (HESTON AND KENLEY AERODROMES EXTENSION) (recommitted) BILL.

Considered in Committee.

[Colonel Clifton Brown in the Chair.]

CLAUSE 1.—(Power to acquire Heston lands.)

9.7 p.m.

Mr. Perkins: I beg to move, in page 3, line 21, to leave out "forty-two," and to insert "forty."
I am merely moving this Amendment, which stands in my name and the names of several other hon. Members, in order to get an explanation from the Undersecretary why nothing is to be done at Heston Aerodrome for the next three years. Why should we wait until 1943 to see this aerodrome put right? My hon. and gallant Friend may tell us that this sort of thing takes a great deal of time, that they have to cut down a lot of trees, that they have to close a lot of roads, rebuild a lot of roads, pull down old hangars and build new ones, build a new rectory and, finally, level the ground. He will tell us that that cannot possibly be done for at least three years. If this work was required for the defence of London, for the Royal Air Force, we should not have to wait three years for it. Hon. Members in whose constituencies aerodromes have been built know perfectly well that almost in a night these aerodromes are built. In six months the aerodrome is completed. Because this aerodrome is wanted for civil aviation, we are told that there is no hurry, and

it may perfectly well be postponed. The real fundamental reason is the outlook of the Air Council towards civil aviation. As the hon. and gallant Member for Wallasey (Lieut.-Colonel Moore-Brabazon) said the other day, they are like a cow looking at a passing railway train, and saying: "Wonderful, but it has nothing whatever to do with me." Everyone knows that in the past and now the Air Council are not in the least interested in civil aviation.

9.9 p.m.

Mr. Eckersley: In supporting what my hon. Friend has said, I should like to congratulate the Air Ministry on the admirable aerodrome that it has made, and it will be a great deal better when these new plans are completed and this new ground has been taken in. I cannot see why the work should not be done before the end of 1943, and I would appeal to the Under-Secretary to-night to give us an assurance that, although he may not accept this Amendment, if it is pressed, at least he will do his best to get the work going a little earlier. I hope that I am right in thinking that he may be in negotiation with the London Passenger Transport Board for the provision of proper transport facilities to the; aerodrome. If that be so, the delay may be worth while. If that is not the case, then I express the hope that he will take that matter into consideration during the years to come. I hope, however, that it will not be a question of years but of months. I trust that when the work does start the Under-Secretary will consider not only the actual area itself but the taking of powers in every way to ensure free approaches on every side. There are obstructions near to the present Heston Aerodrome, and if the aerodrome is enlarged to its proposed size, those obstructions may become more dangerous, in view of the low approach of modern aircraft. I hope he will hurry the work along as quickly as he can.

9.11 p.m.

Mr. Montague: I should like the: Minister to answer two questions, which arise as a result of the evidence given before the Select Committee in respect of Heston. I should like to know, in the first place, whether arrangements have been completed in respect of the land for the rectory, and what has been done with regard to the tenants who are being dis-


possessed. So far as I can gather, the Air Ministry and the reverend gentleman concerned have been waiting upon the Select Committee, one with the object of trying to get a bit of public path and the other with the object of trying to fob the reverend gentleman off with a bit of waterlogged ground. In the meantime, two urban councils, meeting on different dates, and one joint committee, meeting once a quarter, have met without knowing what the position was, and having no particulars of the result.

The Deputy-Chairman: I would remind the hon. Member that we are discussing the Amendment and not the Clause.

Mr. Montague: I took it that the discussion on the Amendment was going to be general.

The Deputy-Chairman: I have no objection if we discuss the Clause with the Amendment, but perhaps it would be better if the Amendment were withdrawn.

Amendment, by leave, withdrawn.

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Mr. Montague: I think it will be the more convenient course to have a general discussion, because there is not much more arises in the Bill than the points that are raised in the Amendment, and those I am raising now. It appears to me that both the Air Ministry and the reverend gentlemen were waiting in order to get the best of the bargain. Everybody was in doubt as to what the situation was, and a tremendous amount of red tape was in operation in consequence. I should like to know why the arrangement that was suggested and eventually accepted by the reverend gentleman, to make about 100 or 150 yards of road to enable him to get to the place that he was prepared to accept, when he had found that he could not get his own way about the public path, was not suggested before, so as to prevent this extreme delay.
I realise the difficulties of the Ministry and the great amount of time and attention that has been paid to dispossessing the rector of the parish, because of the fact that by law the rector must live in his parish. It was amusing to see the hordes of witnesses and counsel engaged on this matter of dispossession, but very

little was said, except by myself on the committee and one other Member from this side of the House, about the other dispossessed persons—the workmen who were living in cottages. We had a promise made by the Air Ministry that everything would be done that could be done and that they would be as zealous as possible in trying to get these workpeople settled in decent homes. The difficulty of the problem arises from the past. There are houses which have been for a long time old houses let at an uneconomic rent, and the difficulty is to get new places for the people. The local councils are not ready for them, they do-not know where to put them, and they have plenty of applications in their own central areas. But in any event, it is really a hard thing to expect poorly paid labourers to have their rates doubled, and that is the least they can expect, because; the Air Ministry must get them out in order to extend the aerodrome. I hope the Under-Secretary will clear up these matters, because we feel that they are quite as important as the spiritual duties of the rector.

9.16 p.m.

The Under-Secretary of State for Air (Captain Harold Balfour): I am quite ready to respond to the appeal to give information on the subject of the rectory and the tenants. As the Committee is aware, the Select Committee inserted a new Clause which provides, first, that the Secretary of State is to acquire a site of three acres suitable for a parsonage and a garden and offer it free of charge to the rector, and if there is a difference as to whether the site is suitable or not there is provision for arbitration. Secondly, that the rector is to have compensation-on account of the acquisition of the existing rectory on the basis of the Air Ministry bearing the cost of building a new rectory and laying out the gardens as near as possible equivalent to the existing ones. Negotiations are now going on with the Department and with those concerned. We naturally accepted in the spirit as well as in the letter the Clause which has been inserted in the Bill, and we anticipate no difficulty in performing the requirements of the Clause, provided that land is available and that there is a willing seller. It would only be if land were not available, or, alternatively, if the price for such land as was available


was put up against us to such a figure that we who are responsible for the expenditure of public money could not contemplate the purchase at that figure, that we should have difficulty in fulfilling the requirements of the Clause. If that should be the case we should have to come to this House and ask for a special Bill to be passed to enable us to have compulsory powers to acquire the necessary land, as such compulsory powers as we have are limited to the acquisition of land for aerodrome purposes.
I make that reservation as to the possible difficulties in order to issue a warning to anyone who feels that they can put up the cost and hold us to ransom, as it were, that we have at our back those powers. But the negotiations are proceeding satisfactorily, and I anticipate no difficulty in obtaining an alternative site for the rectory

Mr. Montague: What does the Undersecretary mean by "progressing satisfactorily?" All that he is now saying we knew already. I want to know whether anything further has been done. Has the land been acquired? Have the councils concerned agreed upon the roads? Things ought to have gone much further than what the Under-Secretary has indicated. The negotiations were going on when the Select Committee finished its work, and I think that by now we should know whether the difficulties have been got over. The difficulties were largely the result of the desire of the Air Ministry and the other person concerned to get the best bargain they could without letting anybody know to what they would be willing to agree.

Captain Balfour: I cannot go beyond saying that negotiations are proceeding, and it would be quite inadvisable while the negotiations are proceeding to give any sort of statement that they are going to be successfully concluded. I do not anticipate difficulty, and, after all, we have had but a comparatively limited space of time since the Bill passed the Select Committee. It takes a little time to negotiate with those who possess land, whether it is the local authority or some private owner, which can be offered as a suitable site. The rector has the right to consider whether it is a suitable site.

Mr. Montague: That has all been done.

Captain Balfour: No. The rector has the right to consider whether it is a suitable site or not and I do not think we can expect the rector through his legal advisers to decide as to whether it is a suitable site or not in the time since the Bill came from the Select Committee.

Mr. Montague: Do I understand this to be the position? The extension of the aerodrome will go on according to the specified programme whatever happens with regard to the rectory? In other words, if you are not able to find an alternative site in the time he will have to take lodgings somewhere else until you do?

Captain Balfour: That is the position. The paramount need for developing this airport was granted by the Select Committee, who did not stipulate that the rector must be offered alternative accommodation before the scheme can go forward. But we accept the Clause in the spirit in which it was put in, and we shall endeavour to do the fair thing by the rector as well as by the public purse. The hon. Member asked me a question about the tenants. Here, again, since the Second Reading of the Bill and during the time that the Bill has been in Committee, good progress has been made in the examination and solution of this problem. Of the 80 or 90 tenants who were outside the Bill and whom we said we would deal with as if they were inside the Bill, nearly 20 of them have found accommodation elsewhere, and the present number whose problem of housing has to be solved is 61. A further examination has shown that we have no need to evacuate any tenants until September, 1939, and then only 12 families. These we can house in a block of flats which are our property and we shall do so at the existing rents. We shall also facilitate the removal to the new accommodation. The occupants of a cottage required in March, 1940, for the site of the new road can be accommodated in flats on the same basis at the existing rent, and we shall facilitate their removal. All the remaining tenants can stay until September, 1940.
Generally, we have warned the tenants of our intentions and we have given them as long as possible to make arrangements, and we have left them free to terminate their existing tenancies at an earlier date if it is convenient to them. The matter


of the permanent rehousing has been taken up with the three local housing authorities. The hon. Member knows that negotiations with local authorities are not rapidly concluded, but we are in negotiation with them with a view to providing such accommodation as shall be required. A house-to-house survey is going on in order to ascertain precisely the tenants requirements and the amount of accommodation in the area in which they prefer to live. Generally, we anticipate no serious difficulties and the Committee may rest assured that all possible steps will be taken to abide by the statement which was made on the Second Reading of the Bill. That is the position as regards the tenants which I trust the hon. Member for West Islington (Mr. Montague) will not consider unsatisfactory.
I now turn to the Amendment which the hon. Gentleman the Member for Stroud (Mr. Perkins) withdrew. I am glad he withdrew it, because we should not have been able to accept it. I think he himself should welcome its non-acceptance because it is quite objectless as an Amendment. It suggests that the power of acquiring land compulsorily shall cease in 1940. It is a normal practice in all Bills for compulsory powers of acquisition of land that the powers should extend for a period of three years from the time the Bill is passed. The Select Committee accepted that period of three years. The Amendment would not embarrass us at all because our notices to treat will all be served before 1939 is over.
If the objective of the Amendment was to speed up the Heston Scheme I am afraid it would not be served by the acceptance of the Amendment, because speeding up is a matter for the administrative action of the Air Ministry. Our programme has been drawn up to complete the airport in the shortest possible time. The reason why we cannot complete until 1942 is that the aerodrome must continue in use owing to our traffic requirements, and the ground takes time to consolidate after the removal of buildings. Grass after sowing takes a certain time to become established and even all the enthusiasm of my hon. Friend the Member for Stroud cannot overcome the processes of nature. Temporary buildings have to be provided to cover the interim period. The permanent airport buildings cannot be

planned and built in a style worthy of the main airport of the country in a few months.
If the hon. Member for Stroud quotes cases of Royal Air Force acquisition of aerodromes I would point out that a great deal of temporary hutting can be provided in those cases, but that would not suffice in this case. Alternative roads have to be built before the existing roads are closed. Our programme for completion in 1942 has been carefully calculated and provides no margin at all for any serious hitch or hold-up. It is sufficient to say that no one is keener than I am to speed up construction of the airport. I have reviewed this programme and cannot see that we can complete the programme in a lesser time than I have stated. We are losing no time at any stage. If the hon. Member for Stroud wishes, I will, at some later date, give him full details of each stage, month by month. I believe that this is an airport which will be one of the finest, if not the finest, in the country, and will be a credit to the country.

9.29 p.m.

Rear-Admiral Sir Murray Sueter: I should be obliged if the Air Ministry would remember, in clearing this site, that the rector has in his parsonage grounds six acres and that he uses some of it for a garden and another part as a playing-field. If they can give him six acres, the same amount as he has in his own rectory grounds which are now to be taken over, I should be much obliged. Also, in the present parsonage house he has a very large hall used for all sorts of social entertainments connected with his work. I hope that the Air Ministry will give him sufficient money to have a rectory and hall exactly the same as the present rectory, and will also give him sufficient money to lay out the garden properly as a rectory should be laid out.

Captain Balfour: The hon. and gallant Member for Hertford (Sir M. Sueter) asks if we shall give more than the three acres the Bill stipulates. I cannot say as to that. We are under an obligation to provide three acres.

Sir M. Sueter: The Clause says, "approximately three acres." You are not bound down to three acres. "Approximately" may be three, four, five or six acres.

Captain Balfour: I understand that the rector accepted three acres.

Sir M. Sueter: That is only because he could not get any more on a particular site.

Captain Balfour: This is a difficult point. I should have thought that three acres of garden was ample as regards upkeep. Regarding putting back a hall such as that in the present parsonage, so that it can be used for recreational purposes, it is stipulated in the Bill that we bear the cost of building a new rectory and laying out gardens as near as possible similar to the present ones. Therefore any facilities in the present rectory will have to be provided in the new one. If there is any dispute there is the further safeguard for the rector of arbitration.

Mr. Eckersley: Could my hon. and gallant Friend give us any idea whether there is any possibility of the London Passenger Transport Board giving any rail facilities to the new airport?

Captain Balfour: We are in negotiation to see whether that can be done. The capital cost of a special line would be enormous and the institution of the line must, to a considerable extent, depend on the revenue likely to accrue. It may be that civil aviation will grow to such a degree that if a line is not instituted at the outset the London Passenger Transport Board, in years to come, will come clamouring for one to be provided.

Clauses 2 to 11 ordered to stand part of the Bill.

Schedules agreed to.

Preamble agreed to.

Bill reported, without Amendment; read the Third time, and passed.

Orders of the Day — BRITISH OVERSEAS AIRWAYS [Money].

Resolution reported,
That for the purposes of any Act of the present Session to make provision, amongst other matters, for the establishment of a British Overseas Airways Corporation, and to make further and better provision for the operation of air transport services, it is expedient—

A. To charge on the Consolidated Fund any sums required by the Treasury for

fulfilling any guarantee of the redemption or repayment of, and the payment of interest on, any stock issued or temporary loan raised by the corporation, being stock or loans the aggregate amount of the principal whereof outstanding at any time (exclusive of amounts borrowed for redeeming stock or paying off a loan) does not exceed ten million pounds.
B. To authorise the payment into the Exchequer of—

(a) any sums received by way of repayment of sums issued out of the Consolidated Fund for fulfilling any such guarantee as aforesaid or by way of interest thereon; and
(b) any sums paid by the corporation to the Secretary of State under the said Act.
C. To authorise the payment out of moneys provided by Parliament of—


(a) grants to the corporation of such amounts as may be determined by the Secretary of State under the said Act;
(b) such grants as the Secretary of State may agree to make in consideration of undertakings with respect to overseas air transport services entered into with him by any company in which the corporation has a financial interest and to which a subsidy is payable by the Government of some country other than the United Kingdom in consideration of corresponding undertakings entered into by that company with that Government; and
(c) any expenses incurred by the Secretary of State in the provision of facilities for the operation of aircraft of the corporation or of any such company as aforesaid;

Provided that the aggregate amount of the grants to be made under this Resolution in any financial year, where added to the aggregate amount of any subsidies paid in that year under agreements made before the commencement of the said Act in pursuance of Section one of the Air Navigation Act, 1936, as amended by the Air Navigation (Financial Provisions) Act, 1938, shall not exceed four million pounds, and no such grant shall be made after the thirty-first day of December, nineteen hundred and fifty-three."

Orders of the Day — MINING INDUSTRY (AMENDMENT) BILL.

Not amended (in the Standing Committee,) considered.

Motion made, and Question proposed, "That the Bill be now read the Third time."

9.35 p.m.

Mr. Gordon Macdonald: I want personally to welcome the Third Reading of this


Bill. Ever since 1920, the Mines Department has suffered from the serious disability of having its expenditure limited to £250,000. I am satisfied that had there been no limitation of that nature during the last 19 years, much more could and would have been done by the Department. In a number of years, the expenditure has been near the maximum, and on one occasion it was within a thousand or so pounds of the maximum. When that is the situation, there has to be a retrenchment somewhere, and often it has been in directions which we think have caused the Mines Department to be less effective than it would otherwise have been. On Tuesday of last week, I put a question to the Secretary for Mines, to which he gave a very acceptable answer. That answer indicated that the Mines Department were alive to the need of doing certain things which we consider to be necessary. I realise that the suggestion I made then would lead to substantial expenditure, but now that the maximum has been removed, it seems to me that there is no limit, save that of the closed fist of the Treasury. I hope and believe that the Secretary for Mines will see to it that the extended powers which he now possesses will be used in certain definite ways which have been pressed upon his predecessors in years gone by.
One of the appalling features of the mining industry is the very heavy accident rate, and I hope that as a result of these extended powers, the hon. Gentleman will be able to take such measures as will reduce that very heavy rate. I realise that an increase in the number of inspectors will not of necessity bring about such a reduction, but I am satisfied that the reorganisation which the hon. Member outlined on Tuesday of last week will be some contribution towards reducing the accident rate. One of the reasons why I welcome the Bill so much is that this could not have been done without these provisions. There is, moreover, another aspect which has been brought to the notice of the Department by many hon. Members on this side of the House, and particularly by the hon. Member for Leigh (Mr. Tinker). It is the question of overtime. I am satisfied that an increased inspectorate will find out about overtime in a way which the previous inspectorate could not do. We know that the inspectors have been very heavily worked. We have no fault to

find, for they have done their job exceptionally well; but we are satisfied that a few more inspectors who could pay unexpected visits to different collieries an hour or so after the end of the shift would find that overtime is being worked to an extent that ought not to be allowed.
That is another reason why we welcome the Bill. It will enable the Mines Department to increase the inspectorate, and that increase will enable the inspectorate to do work which hitherto they have not been able to do. I hope that the Secretary for Mines will see to it that the question of what we consider to be illegal overtime—although I know there are differences of opinion as to its illegality—will be dealt with as the result of the passing of this Bill. We of the Miners' Federation heartily welcome the Bill. We realise that it is needed, and we hope that it will be used in such a way as, first, substantially to reduce accidents, and, secondly, to deal effectively with what we consider to be the illegal overtime that is now being worked in the mines.

9.39 p.m.

Mr. Tinker: I want to welcome the Third Reading of the Bill and to compliment the Secretary for Mines on having brought forward a reform which ought to have been carried out long ago. It is evident from the Financial Memorandum that the Mines Department has been cutting itself to the bone in order to keep within the limits. In the mining industry, where there is such a high accident rate, one would have expected that no expense would have been spared to meet that difficulty, but it is evident from the Financial Memorandum that the Department has been tied down to a limit beyond which it could not go, because it was not allowed to do so by Parliament. It has now been found necessary to do something in that direction. In welcoming the Bill, hon. Members on this side hope that many of the things for which we have asked in the past will be attended to.
One of those matters is the inspectorate. We hope that there will be an increase in the number of inspectors, so that, not being overworked, they will be able to spend more of their time in the mines. In the past, the inspectors have had to come back and give their report, and in my opinion, they have not been able to give sufficient attention to the actual


work in the mines. To understand a mine, the inspector must be on the spot and must be below ground, watching very closely what is taking place. Unless there is a fair number of inspectors to do that work, it is liable not to be done as it ought to be done. The accident rate increases because there is not sufficient supervision in the rush for profits. The men are called upon to do many things which would not be permitted if the inspectors knew of them. In many cases, the Mines Act needs to be strengthened, but even if it were carried out as it ought to be, the accident rate would be reduced. If only for that reason, we welcome the possibility of there being more inspectors as a result of this Bill.
I am very pleased to be able to compliment the Secretary for Mines on having used his influence, as I believe he has, by saying that if he had to take charge of this Department, he must have sufficient money behind him in order to see that the work of the Department is carried out properly. If he has done that, he deserves our gratitude. I hope that the provisions will be carried out fully, if only for the purpose of reducing the accident rate.

9.42 p.m.

Mr. E. J. Williams: I do not want to recapitulate what was said in the Committee by hon. Members on this side, but I should like the Secretary for Mines to explain why a figure is inserted in the Bill, and also why it is such a small figure. Why could not the amount have been increased?

Mr. G. Macdonald: There is no figure in the Bill.

9.43 p.m.

Mr. George Hall: It is very unusual to have a Bill dealing with the mining industry which can be regarded as non-controversial, as this Bill is. As my hon. Friend the Member for Ogmore (Mr. E. J. Williams) said, those of us who were Members of the Committee expressed our views on the Bill in the Committee. I want simply to point out to the Secretary for Mines that now there can be no excuse on the part of his Department for not proceeding with the very important work which all of us think should be done, not only with regard to safety, which is most important,

but also with regard to the very important matter of research. The Bill is preliminary to a very much bigger Bill, which will deal with many aspects of the mining industry, and which, we trust, will be introduced by the hon. Gentleman during the next Session of Parliament, and will embody, not merely the main recommendations of the Royal Commission on Safety in Mines, but the whole of the recommendations. I want to say that the whole of the mineworkers of this country and the official organisation welcome this Bill, which will remove what many have regarded in the past as being the excuse for there not being greater activity on the part of the Mines Department.

9.44 p.m.

The Secretary for Mines (Mr. Geoffrey Lloyd): I wish to thank hon. Gentlemen for the support they have given me on this Bill. I think the hon. Member for Ogmore (Mr. E. J. Williams) will appreciate that the figure is only an estimate of the expansion of the mines inspectorate. I will pay special attention to that aspect of the duties of the inspectors which relates to overtime.

Orders of the Day — IMPORT DUTIES (IMPORT DUTIES ACT, 1932).

MERCURY BICHLORIDE.

9.45 p.m.

The Parliamentary Secretary to the Board of Trade (Mr. Cross): I beg to move,
That the Additional Import (Key Industry) Duties (No. 1) Order, 1939, dated the fourth day of July, nineteen hundred and thirty-nine, made by the Treasury under the Import Duties Act, 1932, a copy of which was presented to this House on the said fourth day of July, nineteen hundred and thirty-nine, be approved.
This Order relates to mercury bichloride which has been subject since 1921 to a duty of 33⅓ per cent. Under the Order it becomes liable to duty at such a rate as with the Key Industry duty will amount to 2s. per lb. The new rate is equivalent at the present value of imports—and those values are extremely low—to an ad valorem duty of a little more than double the previous rate. Mercury


bichloride is used for pharmaceutical purposes as an antiseptic, in certain types of dry batteries, as a parisiticide for the treatment of wood, and for the manufacture of other mercury compounds. The United Kingdom has sufficient capacity to supply all our home requirements. Since 1937 there has been greatly increased competition from imports at very low average values. These have come particularly from Italy and in the course of the present year they have also come from Russia at even lower average values.
The Italian exporters, I understand, have been able to get supplies of mercury, and mercury is the principal component and the most costly component in mercury bichloride, at prices lower than the world market prices which have been paid by United Kingdom manufacturers. Indeed this has gone to such a length that the c.i.f. value of the imports in many cases has been less than the cost to the United Kingdom manufacturers of the mercury content alone. As a consequence of this competition the United Kingdom share of the home market and the volume of our export trade have both been greatly reduced. The duty on the recent values of imports is on a reasonable level, despite the fact, which I have already indicated, that it would be something more than twice the 33⅓ per cent. which obtained in the past. The 2s. duty added to the import value of mercury bichloride would bring the total import value up to 4s. 6d. per lb. and that compares with the United Kingdom schedule price of from 4s. l0d. to 5s.

Mr. Alexander: Is that net?

Mr. Cross: I would not like to say whether or not it is net. It is the schedule selling price of United Kingdom manufacturers.

Mr. Alexander: This is an interesting little sum in arithmetic. If the import value is 4s. 6d. a pound and the United Kingdom price is 4s. l0d. to 5s., how is the hon. Gentleman going to justify this additional tax? How is this going to benefit the United Kingdom manufacturer if you leave the import at a lower price?

Mr. Cross: I think if the right hon. Gentleman adds selling cost to the import value which I have given him, he will see what the position is, and he must also make some allowance for the fact

that the British manufacturer may accept a price somewhat below the actual schedule price. I mention these figures to show that this protection is not excessive and I seem to have been very successful because the right hon. Gentle-man apparently feels that this duty might be foolishly inadequate and purposeless. The United Kingdom manufacturers have given the Import Duties Advisory Committee a satisfactory undertaking to maintain their prices at the present level, subject to adjustment in accordance with the variations in the price of mercury. The Committee report that the industry is efficient and there has been no opposition from consumers to the application for an additional duty.

9.50 p.m.

Mr. Alexander: I do not propose to ask my hon. Friends to divide against this Order, but I feel that the Parliamentary Secretary to the Board of Trade has just now been proving what we on this side have said so often with regard to the two and a half years' campaign in Spain. This Order is one of the direct results.

Mr. E. J. Williams: This is the price that we are paying for Franco.

Mr. Alexander: The Parliamentary Secretary shakes his head, but he need not do so. It is clear at any rate that this mercury bichloride has come, in the past, in large quantities from Italy. The hon. Gentleman said in a rather gentle and naive way that Italy was now able to get large quantities of mercury. Of course we on this side know what that means. They have now very much better access than they otherwise would have to the great resources of mercury which Spain possesses, and therefore we are in the position to-night of having to put on this additional duty to protect our industry here, which no doubt has experienced considerable difficulty in the last three years in obtaining adequate supplies of mercury in order to make bichloride. I suppose the Parliamentary Secretary will be frank with us about that aspect of the matter.
Of course none of us really wants to create exchange reserves in this country for totalitarian States who might find it very useful to use those reserves in the present state of nerves and of rearmament throughout Europe. This is just a little part of the penalty which the Gov-


ernment has to pay for its acts of un-wisdom, for its sins of omission and commission in foreign policy in the last three years. I can understand from reading some of the uses of this substance which are mentioned in the White Paper, such as its use for antiseptic and pharmaceutical purposes, that it would be of considerable value to us in war time. As I say, I do not think my hon. Friends will regard this as a big enough question on which to divide and I shall not ask them to do so, but I do wish that in connection with Orders of this kind the Government would take the House a little more into their confidence.

9.53 p.m.

Sir Percy Harris: I agree that in this matter we have to recognise the special circumstances of the case and the necessity for keeping alive essential chemical industries. I have a vivid memory of the fact that this is one of the key industries about which there was such controversy when these duties were originally imposed. We have now had 18 years of protection of this industry and it ought to be in a very strong position by this time. But apparently there are special circumstances in this case. There is one comment I would make on Orders of this kind. There is a paragraph in the Import Duties Advisory Committee's recommendation which says:
There are no official figures published of the home output or of total imports but we have obtained in confidence information as to production from each of the firms concerned and we have had access to official statistics of imports which, however, are not available for publication since this might reveal particulars of the trade of individual importers.
With great respect to the Committee I think that when an order of this kind, extending an exceptional amount of protection and special privileges, is in question, Parliament is entitled to have a statement of the imports and some indication of the amount of production in this country. I do not see that there is any adequate reason for concealing these facts and figures, and I hope this case will not be taken as a precedent. It is not argued that it is not in the public interest that we should not know what the imports are or what quantity is produced in this country. All that is said is that it would be inconvenient to the interests of the traders concerned that the information should be

disclosed. I say that when business people ask for these very exceptional privileges we are entitled to know the position as regards imports and home production, at any rate in round figures.

9.56 p.m.

Mr. Cross: In reply to the hon. Member for South West Bethnal Green (Sir P. Harris) there is, I think an exceptionally good reason on this occasion for not giving the figures of home production. There are only two concerns engaged in production here and each of them has given its figures confidentially, and either of them would need to do only a very small subtraction sum in order to get information as to the business of the other which is not at present available to it. The right hon. Member for Hillsborough (Mr. Alexander) told us that our sins in foreign affairs were coming home to roost. Whether they be sins or not, nothing is coming to roost, because strangely enough—I think the right hon. Gentleman will think it strange—my mind worked in exactly the same direction as his. As a consequence I made inquiries, both in the Board of Trade and of the Import Duties Advisory Committee, as to whether this might not be a Spanish export which the Italians are anxious to get rid of. I did that all the more because I observed that the first year of heavy imports into this country was 1937, and with my mind working on lines parallel with his I was inclined to attach special significance to that fact, but I am assured that there is every reason for thinking that this is not a Spanish product, because the mercury is mined exclusively in what throughout the greater part of the struggle was a Government area in Spain.

Mr. Alexander: With the permission of the House may I remind the hon. Gentleman that they were practically all Italian troops who captured those mercury concessions.

Resolved,
That the Additional Import (Key Industry) Duties (No. 1) Order, 1939, dated the fourth day of July, nineteen hundred and thirty-nine, made by the Treasury under the Import Duties Act, 1932, a copy of which was presented to this House on the said fourth day of July, nineteen hundred and thirty-nine, be approved.

GREENWICH HOSPITAL AND TRAVERS' FOUNDATION.

Resolved,
That the statement of the estimated income and expenditure of Greenwich Hospital and of Travers' Foundation for the year 1939, a copy of which was presented to this House on the 8th day of May, 1939, be approved."— [Colonel Llewellin.]

BRITISH OVERSEAS AIRWAYS BILL.

Mr. Garro Jones, Commander Marsden, Mr. Mander, and Sir Annesley Somerville nomina-

ted Members of the Select Committee on the British Overseas Airways Bill."—[Major Sir James Edmondson.]

The remaining Orders were read, and postponed.

ADJOURNMENT.

Resolved, "That this House do now adjourn."—[Major Sir James Edmondson.]

Adjourned accordingly at One minute before Ten o'Clock